An Increase in Net Taxes (Taxes Paid by the Private

question 141

Multiple Choice

An increase in net taxes (taxes paid by the private sector to the government less transfer payments and interest payments made by the government to the private sector) will:

• A)increase private saving.
• B)decrease public saving.
• C)increase public saving.
• D)reduce investment in new capital equipment.

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Definitions:

Liquidity

The ease with which an asset can be converted to cash without affecting its market price.

Homemade Dividends

The concept where investors sell a portion of their portfolio to create cash flow, as an alternative to relying on traditional dividends from investments.

Dividend Policy

A company's strategy or guidelines for making dividend payments to its shareholders.

Share Value

The price at which a particular share of stock is traded on the market, determined by supply and demand.