Using the Keynesian Model,the Effect of a Decrease in the Effective

question 46

Multiple Choice

Using the Keynesian model,the effect of a decrease in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the long run.

• A)an increase; no change
• B)a decrease; no change
• C)an increase; an increase
• D)no change; a decrease

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than its fair value, attributed to factors like reputation, brand, and customer relationships.

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable parties in an arm's length transaction.

Book Value

This is the net value of a company's assets minus its liabilities, as recorded on the balance sheet.

FIFO Inventory Method

An inventory valuation method where the first items acquired are the first ones sold, used to determine the cost of goods sold and ending inventory.