Consider the following methods of taxing a corporation's income:
a. A flat tax, as opposed to a progressive tax, is levied on corporate profits.
b. A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax.
c. A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains.
Which of the methods above would avoid double taxation?
A) a, b, and c B) a and b only C) a and c only D) b and c only
D
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Which of the following is one component of the "trilemma" that is faced by policy makers in choosing monetary arrangements?
A) exchange rate stability B) restrictions on international capital movements C) tariffs and subsidies D) restrictions on the migration of labor E) global inflation
An externality is an event which
a. is external to economics. b. always brings harm to someone in the economy. c. is incidental to some market activity. d. harms the economy as a whole rather than a particular person.