In a Recent Research Paper Published by the European Central

question 157

Multiple Choice

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

• A) increase if labor taxes were increased or if capital income taxes were increased.
• B) increase if labor taxes were increased, but tax revenues would decrease if capital income taxes were increased.
• C) decrease if labor taxes were increased, but tax revenues would increase if capital income taxes were increased.
• D) decrease if labor taxes were increased or if capital income taxes were increased.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, reflecting the price paid for the use of a lender's money.

Straight-Line Method

This is a depreciation technique that allocates an equal portion of an asset's initial cost minus its salvage value to each year of the asset's useful life.

Semiannual

Semiannual refers to something that happens twice a year or every six months.

Discount on Bonds Payable

The variance between a bond's nominal value and the lesser amount it is sold for in the market.