Taxes on Stock Gains and Inflation. Suppose you bought a stock for $100 and its value stayed constant in real terms.Over 10 years, the price of the stock in dollar terms has doubled.If you sold the stock after 10 years and your tax rate was 20.0%, how much tax would you owe? $. (Enter yourresponse as a whole number.)The real tax burden on buying and then selling stocks tends toOA. increase with inflation because the nominal gain, on which the tax burden is based, decreases with inflation; butinflation increases the real gain.OB. increase with inflation because the nominal gain, on which the tax burden is based, increases with inflation; butinflation reduces the real gain.OC. decrease with inflation because the nominal gain, on which the tax burden is based, decreases with inflation;but inflation reduces the real gain.O D. decrease with inflation because the nominal gain, on which the tax burden is based, increases with inflation; butinflation reduces the real gain.

When you sell stocks for a profit, you have to pay capital gains taxes. Capital Gain Tax imposed by…

Answered: If you sold the stock after 10 years…

If you sold the stock after 10 years and your tax rate was 20.0%, how much tax would you owe? $ response as a whole number.) The real tax burden on buying and then selling stocks tends to (Enter your

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Taxes on Stock Gains and Inflation. Suppose you bought a stock for $100 and its value stayed constant in real terms.
Over 10 years, the price of the stock in dollar terms has doubled.
If you sold the stock after 10 years and your tax rate was 20.0%, how much tax would you owe? $. (Enter your
response as a whole number.)
The real tax burden on buying and then selling stocks tends to
OA. increase with inflation because the nominal gain, on which the tax burden is based, decreases with inflation; but
inflation increases the real gain.
OB. increase with inflation because the nominal gain, on which the tax burden is based, increases with inflation; but
inflation reduces the real gain.
OC. decrease with inflation because the nominal gain, on which the tax burden is based, decreases with inflation;
but inflation reduces the real gain.
O D. decrease with inflation because the nominal gain, on which the tax burden is based, increases with inflation; but
inflation reduces the real gain.

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