Question

Norbert purchased 100 shares of Gentech stock for $200 per share in year 1 and sold all the shares in year 2 for $220 a share. Between year 1 and year 2, the price index increased by 5 percent. The tax on capital gains is 50 percent. If the capital gains tax is on nominal gains, how much tax does Norbert pay on his gain? $950 $1000 $900 $1050 Question 40 (1 point) In order to maintain stable prices, what must the central bank do? maintain low interest rates tightly control the money supply keep unemployment low sell indexed bonds

Answer 1

39) The answer is $1000

40) The answer is tightly control the money supply

Solution

39) Here total capital gain = number of shares sold * profit on each share

= 100 * 20

=2000 dollars

We'r given that tax is 50% on gains .

Hence tax paid on capital gain = (50/100)*2000

= 1000 dollars

40) We know the central bank practices monetary policy measures which include rseerve requirements, open market operations etc. These policies are aimed at controlling the money supply in the economy to maintain stable price levels and reduce volatility within the economy.