Which of the Following Tax Planning Strategies Is Based on the Present

question 86

Multiple Choice

Which of the following tax planning strategies is based on the present value of money?

• A) timing.
• B) tax avoidance.
• C) income shifting.
• D) conversion.
• E) none of these.

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Definitions:

Autonomous Consumption

The minimum level of spending that must occur, even if a household has no income.

Disposable Income

The sum households have for expenditures and savings after taxes on income are deducted.

Dissaving

The process where spending exceeds income, leading to a depletion of savings or accumulation of debt.

APC

The Average Propensity to Consume, which measures the fraction of income that households spend on goods and services rather than saving.