Reducing Taxes by a Specific Fixed Amount Will Usually

question 142

Multiple Choice

Reducing taxes by a specific fixed amount will usually:

• A)lower income and lower spending.
• B)raise income and lower spending.
• C)lower income and raise spending.
• D)raise income and raise spending.

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Definitions:

Interest Rate Risk

The potential for investment losses caused by fluctuations in interest rates, affecting debt securities inversely with their prices.

Treasury Bonds

Long-term government securities issued by the U.S. Department of the Treasury with a maturity period typically ranging from 20 to 30 years.

Corporate Bonds

Debt securities issued by corporations to finance their operations, typically offering fixed interest payments and repayment of principal at maturity.

Yield Spread

The difference in yields between two different types of financial securities, often used as a measure of relative risk.