In the Current Year, Red Corporation (A Calendar Year C

question 74

Multiple Choice

In the current year, Red Corporation (a calendar year C corporation) , which owns stock in Blue Corporation, had net operating income of $200,000 for the year. Blue pays Red a dividend of $40,000. Red takes a dividends received deduction of $20,000. Which of the following statements is correct?

• A) Red owns 80% of Blue Corporation.
• B) Red owns 20% or more, but less than 80% of Blue Corporation.
• C) Red owns 80% or more of Blue Corporation.
• D) Red owns less than 20% of Blue Corporation.
• E) None of the above.

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at different price levels, during a specified time period.

Investment Spending

The expenditure on capital goods including buildings, machinery, and equipment, which are used to produce goods and services in the future.

Aggregate Supply Curve

A graph that shows the relationship between the overall price level in the economy and the total output (GDP) that firms produce and sell, at all possible price levels.

Trade Restrictions

Measures imposed by governments to regulate international trade, including tariffs, quotas, and embargoes.