Taxes on Labor Have the Effect of Encouraging

question 38

Multiple Choice

Taxes on labor have the effect of encouraging

• A)workers to work more hours.
• B)the elderly to postpone retirement.
• C)second earners within a family to take a job.
• D)unscrupulous people to take part in the underground economy.

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Definitions:

Treynor's Measure

A performance metric for determining how well an investment portfolio has compensated the investor for the risk taken, using beta as the risk measure.

Risk-Free Return

The theoretical return on an investment with zero risk, typically represented by government bonds or bills, serving as a benchmark for assessing investment performance.

Information Ratio

This ratio measures the excess return of a portfolio over the benchmark's return, relative to the volatility of those excess returns, indicating the portfolio manager's ability to generate consistent excess returns.

Risk-Free Return

The theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.