When Taxes on the Return to Capital in a Given

question 89

Multiple Choice

When taxes on the return to capital in a given economy are reduced,it causes firms to employ __________ capital goods.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis) ,this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

• A) less; the production function to shift downward; leftward; a shrinking economy
• B) more; the production function to shift upward; rightward; economic growth
• C) more; a movement up along a given production function; rightward; economic growth
• D) more; a movement down along a given production function; leftward; a shrinking economy

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Definitions:

Future Value

An asset or cash's value on a particular date in the future, matching the value of a specified amount now.

Interest Rate

The percentage of an amount of money charged for its use over a specified period.

Cash Flows

Refers to the total amount of money being transferred into and out of a business, especially affecting liquidity.

Years

Units of time equal to 365 days (or 366 days in a leap year), often used as a measure of time for financial, operational, or strategic planning.