For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their investment in new capital, then the ________ shifts ________.
A. aggregate demand curve; left
B. short-run aggregate supply line; downward
C. aggregate demand curve; right
D. short-run aggregate supply line; upward
Answer: C
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A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%
If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will A) sell it to the U.S. parent at a transfer price equal to marginal cost, which will then sell it to the Irish subsidiary at monopoly level pricing. B) set the transfer price to the Irish subsidiary at the monopoly level. C) set the transfer price to the Irish subsidiary at marginal cost. D) Unable to determine with the information given.