What Rate Should Be Used When Calculating the After-Tax Future

question 18

Multiple Choice

What rate should be used when calculating the after-tax future value of investments with a constant rate of return that is taxed annually?

• A) annual before-tax rate of return
• B) annual after-tax rate of return
• C) marginal tax rate
• D) preferential tax rate
• E) average tax rate

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Definitions:

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs resources and technology.

Economic Decline

A period where an economy experiences reduced economic activity, often marked by decreases in GDP, employment, and consumer spending.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources), assuming all inputs are used efficiently.

Unemployment Rate

The share of the working group that is currently without a job and actively on the lookout for one.