Which One of These Costs Accounts for the Difference Between

question 22

Multiple Choice

Which one of these costs accounts for the difference between accounting income and economic value added?

• A) depreciation
• B) cost of capital
• C) taxes
• D) dividends

---

Definitions:

Transfer Payments

Financial payments made by the government to individuals without any expectation of goods or services being returned, such as welfare benefits.

Budget Deficit

The situation when a government's expenditures exceed its revenues within a specific budget period, leading to borrowing or use of saved reserves.

Interest Rate

The slice of a loan imposed as interest upon the borrower, usually articulated as an annual percentage of the loan still to be repaid.

Federal Income Tax

A tax imposed by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.