The Undesirable Effects of Bracket Creep Can Be Eliminated by Indexing

question 75

True/False

The undesirable effects of bracket creep can be eliminated by indexing marginal tax rates.
If incomes rise due to inflation,this will move some earners into a higher tax bracket unless tax rates are indexed to the price level.

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Definitions:

Short-term Investments

Assets intended to be converted into cash or sold within a year.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets.

Liquidity

The ease with which an asset or security can be converted into ready cash without affecting its market price.

Preferred Shareholders

Investors who own preferred shares in a company, which often grant them benefits such as fixed dividend payments and priority over common shareholders in case of liquidation.