I came across this problem in the Schweser QBank (FRA section) and I’m having trouble comprehending the fundamental logic behind the answer. The questions is as follows:
[question and answer removed by admin]
Can someone please explain to me how it is possible to answer this question with out knowing the scale of the revenue in the various questions. I don’t understand how one can possibly know if the effective tax rate will increase or decrease without any kind of weighting on the revenues.
As always, any help is greatly appreciated!