Which of the Following Statements Is True

question 66

Multiple Choice

Which of the following statements is true?

• A)If a company retains profits instead of paying dividends, the price of their stock is expected to rise.
• B)Investors need not pay taxes on dividend earnings.
• C)Dividend earnings are legally not allowed to be invested and can only be used for consumption.
• D)The annual dividend yield on a stock is always greater than the annual capital-gains yield on the same stock.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, reflecting the value of all goods and services produced by an economy in a given year at constant prices.

Net Taxes

The net amount of money paid to the government through taxes after deducting any government transfers or subsidies received.

Supply-Side Economics

An economic theory proposing that by lowering taxes and reducing regulations to stimulate production, economic growth is achievable.

Aggregate Supply

The overall volume of goods and services that companies in a nation expect to provide for purchase during a certain timeframe.