Application of Demand and Supply Part 2

Question 1

refers to an asset or item that is purchased with the hope that it will generate income or appreciate in the future

Answer 1

Investments

Question 2

Entrepreneurs and capital owners need the return on their investment, covering risk, and earning a reward.

Answer 2

Expected return on the investment

Question 3

This considerably influences the investment decisions of entrepreneurs.

Answer 3

Business confidence

Question 4

Investment appraisals and eventual business decision-making are influenced by expectations such as an economic downturn

Answer 4

General future expectations

Question 5

This reduction is an incentive to invest.

Answer 5

Corporation tax

Question 6

Corporate and household savings offer a flow of funds into the financial sector, which are available for investment.

Answer 6

Level of savings

Question 7

Small changes in household income can trigger changes in investments.

Answer 7

Changes in household income

Question 8

There is an increase in the production level when the gross domestic product (GDP) is high

Answer 8

Level of economic activity

Question 9

The demand for capital increases to keep up with developments.

Answer 9

Technological change

Question 10

The demand for capital can significantly be affected by _______ granting incentives to firms

Answer 10

Public policy

Question 11

the cost of using or borrowing money

Answer 11

Interest rates

Question 12

These are the amount of money given by a lender to a borrower.

Answer 12

Loanable funds

Question 13

Interest is the return earned by the capital as the input in the production process.

Answer 13

Return on capital

Question 14

For investors that are risk averse, these are generally safe investment options, providing fixed periodic sources of income over a certain period

Answer 14

Fixed-income investments (FIIs)

Question 15

There is no full guarantee for returns strongly influenced by the financial markets’ behavior and economic situations.

Answer 15

Variable-income investments (VIIs)

Question 16

refers to the payment for using land and other natural or economic resources in fixed supply.

Answer 16

Rent

Question 17

the positive difference between the actual payment made to the owner for an economic resource for its exclusivity or scarcity and the owner’s expected payment level

Answer 17

Economic rent

Question 18

There can be consequences on the labor market and businesses when the mandated minimum wage rate is higher than the free market wage rate.

Answer 18

Minimum wage

Question 19

the act of levying a tax so that the sovereign, through its law-making body, can raise income to cover the necessary expenses of the government.

Answer 19

Taxation

Question 20

taxes levied by the government on income and wealth from households and businesses to raise government revenue and act as a fiscal policy instrument.

Answer 20

Direct taxes

Question 21

a tax on all yearly profits arising from property, profession, trades, or offices or as a tax on a person’s income

Answer 21

Income tax

Question 22

taxes levied by the government on products and services to raise revenue and to act as an instrument of fiscal policy

Answer 22

Indirect taxes

Question 23

business tax imposed and collected from the seller in the course of trade or business on every sale of properties

Answer 23

Value-added tax

Question 24

a tax on the production, sale, or consumption of a commodity in a country.

Answer 24

Excise tax

Question 25

tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.

Answer 25

proportional tax

Question 26

tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

Answer 26

regressive tax

Question 27

tax in which the tax rate increases as the taxable base amount increases.

Answer 27

progressive tax

Question 28

There is a collected 12% for almost all kinds of product sales, services, and leases, remitted to the Bureau of Internal Revenue (BIR) quarterly or monthly in this type of tax

Answer 28

Value-added tax (VAT)

Question 29

Withholding taxes on compensation refers to the tax withheld from income payments to individuals arising from an employer-employee relationship

Answer 29

Salary and wage taxes

Question 30

Movie houses, basketball games, carnivals, amusement businesses, and even concerts of singers and actors are subject to such taxes by the local and national governments.

Answer 30

Amusement taxes

Question 31

Businesses such as manufacturers of alcohol, tobacco, and petroleum products, importers of automobiles or jewelry, and those involved in mining must pay such taxes.

Answer 31

Excise taxes

Question 32

Businesses pay customs duties for importing products as part of their raw materials and certain industrial machinery and equipment.

Answer 32

Import taxes

Question 33

If your business is a sole proprietorship or a partnership, your income as the proprietor or partner is considered ‘personal income.’

Answer 33

Individual income taxes

Question 34

A corporation is considered a separate tax-paying entity, paying its income taxes.

Answer 34

Corporate income taxes

Question 35

It is a tax levied by the local government on properties

Answer 35

Real property tax

Question 36

______ tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition

Answer 36

Estate and Inheritance taxes

Question 37

The tax burden on an average worker is up to 35% depending on his or her income range

Answer 37

Some effects of high taxes on businesses