The Country of Lessidinia Has a Tax System Identical to That

question 30

Multiple Choice

The country of Lessidinia has a tax system identical to that of the United States.Suppose someone in Lessidinia bought a parcel of land for 20,000 foci (the local currency) in 1960 when the price index equaled 100.In 2002,the person sold the land for 100,000 foci,and the price index equaled 600.The tax rate on nominal gains was 20 percent.Compute the taxes on the nominal gain and the change in the real value of the land in terms of 2002 prices to find the after-tax real rate of capital gain.

• A)-60 percent
• B)-30 percent
• C)30 percent
• D)60 percent

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Definitions:

Wages

Wages refer to the fixed regular payment, typically calculated on a hourly, daily, or piecework basis, made by an employer to an employee.

Interest Rates

The percentage charged on borrowed money, influencing economic growth by affecting consumer spending and investment.

Equilibrium

A state in a market where supply equals demand, and there are no external forces prompting further change, leading to a stable price and quantity.

Quantity Demanded

The entirety of a good or service's amount that patrons are equipped and desirous to buy at a specified price rate.