The Fact That 80% of the Assets Accumulated During a Lifetime

question 22

Multiple Choice

The fact that 80% of the assets accumulated during a lifetime are bequeathed to heirs in the United States suggests that

• A)the appropriate time horizon for consumption theory is the lifetime of the earner.
• B)the appropriate time horizon for consumption theory is intergenerational.
• C)the Barro-Ricardo equivalence theorem is correct.
• D)it is true that higher taxes increase savings.

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Definitions:

Paid-in Capital

Refers to the funds raised by a company through the sale of its shares to investors, representing the capital that shareholders have invested directly into the company.

Treasury Stock

Refers to shares that were once part of the outstanding shares but were bought back by the company and are now held in the company's treasury.

Par Value

A nominal value assigned to a share of stock by the company's corporate charter, unrelated to the market value.

Stated Value

A fixed dollar amount assigned to each share of no-par stock, designated by the board of directors of a company.