Recent Changes in the Tax Code Have Changed the Taxation

question 27

Multiple Choice

Recent changes in the tax code have changed the taxation of cash dividends and capital gains as follows:

• A) cash dividends are taxed at the ordinary rate and all capital gains at a special rate of 50%.
• B) all cash dividends and capital gains as ordinary income.
• C) capital gains as ordinary income and cash dividends for a stock owned more than 18 months at the special rate of 20%.
• D) Short term gains and cash dividends as ordinary income, capital gains earned over less than 18 months at a maximum rate of 28% and capital gains earned over more than 18 months at a 20% rate.

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Definitions:

Nominal Wage

The wage paid to workers measured in current dollars without adjustment for inflation.

Money Supply

Money supply is the total amount of monetary assets available in an economy at a specific time, encompassing cash, coins, and balances held in bank accounts.

Short Run

A period in economics where at least one input is fixed while others are variable, affecting levels of production.

Output

The total quantity of goods or services produced by a company, industry, or economy within a certain period.