Answer the following questions about the capital gains tax in the United States.

(a) Consider the country of Hermanland. In Hermanland, capital gains are assessed when they areaccruedinstead of when they are realized. Is Hermanland's tax treatment of capital gains similar or different to how the United States taxes capital gains? Explain.(5 points)

(b) Consider the country of Arnold-topia. In Arnold-topia, capital gains are taxed when they arerealizedand not when they are accrued. Is Arnold-topia's tax treatment of capital gains the same or different to how the United States taxes capital gains? Explain. (5 points)

(c) Previous research studies have analyzed the effects of changes in the US capital tax rate. What has past research suggested about the SHORT-RUN effect of a DECREASE in the capital gains tax rate? Specifically, would a DECREASE in the capital gains tax rate generate MORE or LESS tax revenue in theSHORT RUN? Explain. (4 points)

(d) What has past research suggested about the LONG-RUN effect of a DECREASE in the capital gains tax rate? Specifically, would a DECREASE in the capital gains tax rate generate MORE or LESS tax revenue in theLONG RUN? Explain. (4 points)