Which of the following is included in physical capital?
a. Roads and bridges
b. A university graduate in physics
c. An astrophysicist
d. A high school diploma or college degree
e. A successful entrepreneur
a
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Why does the segmented markets theory suggest think that bonds of different maturities are not perfect substitutes for each other?
What will be an ideal response?
If a bond sells for $2,000 and pays $200 per year in interest, the interest rate on the bond is
A) 20 percent. B) 10 percent. C) 5 percent. D) 100 percent.
You have obtained data on test scores and student-teacher ratios in region A and region B of your state. Region B, on average, has lower student-teacher ratios than region A. You decide to run the following regression
Yi = ?0+ ?1X1i + ?2X2i + ?3X3i+ui where X1 is the class size in region A, X2 is the difference between the class size between region A and B, and X3 is the class size in region B. Your regression package shows a message indicating that it cannot estimate the above equation. What is the problem here and how can it be fixed? Explain the problem in terms of the rank of the X matrix. What will be an ideal response?
If the government cuts taxes today, issuing debt today and repaying the debt plus interest next year, a rational taxpayer will
A. increase saving today, leaving consumption unchanged. B. spend the full amount of the tax cut today and reduce consumption next year. C. increase consumption today, before taxes go up next year. D. leave a smaller gross bequest to her or his heirs.