Real Rates of Return on Capital Have Not Been Generally

question 19

Multiple Choice

Real rates of return on capital have not been generally falling in this century because:

• A)legal restrictions on interest have been removed.
• B)technological progress has shifted the derived demand for capital out.
• C)inflation has risen steadily.
• D)capital is not subject to diminishing returns.
• E)government policy has been to maintain high interest rates.

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Definitions:

Tax Shelters

Investment strategies or financial arrangements used to minimize tax liabilities, often by deferring or reducing taxable income.

Return on Assets

A financial ratio that indicates the profitability of a company relative to its total assets.

Return on Debt

A measure of a company's profitability relative to its total debt, indicating how effectively a company is using its borrowed funds.