If There Is an Increase in Taxes on Business Firms

question 43

Multiple Choice

If there is an increase in taxes on business firms in a small open economy,it causes the current account to ________ and saving ________.

• A)fall;fall
• B)rise;remain unchanged
• C)fall;remain unchanged
• D)rise;fall

---

Definitions:

Financial Period

A specified duration of time used for financial reporting and accounting purposes, typically one year or one quarter.

Revaluation Surplus

Revaluation surplus is an accounting term that refers to the increase in value of an asset, recognized after its revaluation exceeds its previously recorded value.

Retained Earnings

The accumulation of a company's net profits less any dividends paid to shareholders over its lifetime, reflecting the company's reinvestment back into operations.

Plant Derecognition

Occurs when a fixed asset is removed from the financial statements because it has been disposed of, sold, or is no longer in use and does not provide future economic benefits.