Figure 35-2 Use the Pair of Diagrams Below to Answer the Following

question 85

Multiple Choice

Figure 35-2
Use the pair of diagrams below to answer the following questions.
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in taxes moves the economy to

• A)D and 2.
• B)D and 3.
• C)back to C and 1.
• D)None of the above is correct.

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Definitions:

Capitalization

The process of recording expenditure as an asset on the balance sheet rather than an expense, which is then amortized or depreciated over time.

Market Value

The existing market price for buying or selling an asset or service.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, paid to shareholders in cash.

Common Dividend Payable

Liabilities on a company's balance sheet representing the amount of dividends that are owed to shareholders on common stock.