Which of the Following Is TRUE

question 119

Multiple Choice

Which of the following is TRUE?

• A)A recession will lead to reduced output in the future,but inflation has no effect on future output.
• B)Both recessions and inflations may reduce output in the future.
• C)A recession will lead to reduced output in the future,but inflation will lead to increased output in the future.
• D)A recession will lead to increased output in the future,but inflation will lead to decreased output in the future.

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Definitions:

Yield-to-Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments and repaid principal.

After-Tax Cost of Debt

After-Tax Cost of Debt represents the net cost of debt to a company after accounting for the tax deductions on interest expenses.

Yield-to-Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments made over the life of the bond and the difference between the purchase price and the maturity value.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, effectively the rate applied to each additional dollar of taxable income.