As a part of the tax cut package signed into law on December 17, 2010, the government reduced the employee portion of the payroll tax from 4% to 2% for 2011. According to the permanent-income hypothesis, households that smooth consumption will
A) use all of the extra income generated by this tax reduction for consumption during 2011.
B) use a large portion of the extra income generated by this tax reduction for consumption during 2011.
C) use most of the extra income generated by this tax reduction as saving during 2011.
D) split the income evenly between consumption and saving during 2011, since the tax cut will expire after one year and consumption is smoothed.
C
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A legal claim to a percentage of a company's future profits and assets is known as a
A) share of stock. B) bond. C) dividend. D) random walk.
If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?
a. $20 b. $25 c. $160 d. $250
In a small town of 100 people, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not have jobs, but wanted them. What is the participation rate in this town?
A. 87.5 percent B. 72.0 percent C. 81.1 percent D. 63.0 percent
If a specific tax is implemented
A) the firm's average cost curve shifts up, resulting in lower profits. B) the after-tax marginal cost curve shifts, resulting in lower quantity produced. C) there is less profit per unit sold. D) All of the above.