A Reduction in the Rate at Which Dividends Are Taxed

question 30

Multiple Choice

A reduction in the rate at which dividends are taxed will lead to greater investment in the stock market. This is an example of:

• A)a positive economic statement.
• B)a negative economic statement.
• C)the fallacy of composition
• D)a normative economic statement.
• E)the ceteris paribus assumption.

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Definitions:

Minimizing Costs

Minimizing costs involves finding the most efficient way to operate that lowers expenses without sacrificing the quality or quantity of output.

Rental Rate

The price paid for the temporary use of a good, service, or property, typically expressed as a fee per time period.

Cost Minimization

The process of reducing expenses to the lowest possible level while still achieving the desired level of output or quality.

Normal Rate Of Return

A rate of return on capital that is just sufficient to keep owners and investors satisfied. For relatively risk-free firms, it should be nearly the same as the interest rate on risk-free government bonds.