Lump sum taxes _____
a. are difficult to model theoretically but easy to apply
b. have a small excess burden
c. have no welfare cost
d. require perfectly elastic demand curves
c
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The largest liability of the Fed from those on this list is
A) U.S. Treasury securities. B) mortgage-backed securities. C) loans to depository institutions. D) currency outstanding.
How does a decline in the real interest rate cause an increase in investment?
What will be an ideal response?
Consider the market for medical doctors. Suppose the opportunity cost of going to medical school decreases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will
a. increase. b. decrease. c. not change. d. It is not possible to determine what will happen to the equilibrium quantity.
The investment demand curve portrays an inverse (negative) relationship between:
A. investment and real GDP. B. the real interest rate and investment. C. the nominal interest rate and investment. D. the price level and investment.