STAYER ECO 450 Week 10 Quiz 8 Ch 15 and 16
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1 . The corporate income tax in the United States is levied only on economic profits .
2 . Imputed interest from retained earnings are not deducted when computing taxable corporate income .
3 . In general , the shorter the depreciation period allowed for tax purposes , the higher the tax burden on corporations .
4 . Accelerated depreciation allows a firm to deduct more than the actual economic depreciation from its income each year .
5 . Inflation causes an understatement of true depreciation cost .
6 . If a corporation maximizes profits , an ad valorem tax on its profits will result in a reduction in output in the short run .
7 . Assuming that the corporate income tax is not shifted to consumers in the short run , the long-run effect will be a reduction in the return to investment in both the corporate and noncorporate sector .