Which of the Following Statements Is Incorrect

question 100

Multiple Choice

Which of the following statements is incorrect?

• A)The exclusion ratio represents the proportion of each annuity payment that will be tax-free.
• B)If annuity payments are to be received for a fixed period,the taxpayer does not need to refer to the life expectancy tables provided by the IRS.
• C)To determine the taxable amount of each annuity payment,the taxpayer must know the cost of the contract.
• D)Once the cost of the annuity has been recovered,any remaining payments will be tax-free.

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Definitions:

Normal Good

A good for which demand increases as consumer income rises, and decreases as consumer income falls.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, as opposed to a normal good where demand increases with income.

Linear Demand Curve

A demand curve that shows a straight-line relationship between price and quantity demanded, suggesting a constant rate of change.

Constant Elasticity

refers to a condition in economics where the elasticity of a function, such as demand or supply, remains constant along the curve, indicating a proportional and consistent reaction to changes in other variables.