How are tradable pollution permits used?
a) They are permits bought by firms where prices are set by governments.
b) They will be bought by firms that can reduce pollution only at high costs.
c) They will be bought by firms that can reduce pollution at low costs.
d) They will be used in reducing pollution when corrective taxes cannot be used.
Ans: b) They will be bought by firms that can reduce pollution only at high costs.
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When the Fed ________ interest rates, bond prices ________
A) raises; do not change B) raises; rise C) lowers; rise D) lowers; do not change
Refer to Table 20-3. Assume the market basket for the consumer price index has three products—Cokes, hamburgers, and CDs—with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals
A) 75. B) 93. C) 108. D) 121.
All of the following are incomes earned in the factor market EXCEPT
A. prices of goods and services. B. rents. C. profits. D. wages.
Suppose the nominal interest rate is 6%, the tax rate on interest income is 30%, and expected inflation is 3%.(a)Calculate the expected real after-tax interest rate.(b)Calculate the expected real after-tax interest rate if the nominal interest rate falls to 4%.(c)Calculate the expected real after-tax interest rate if the tax rate increases to 50% (with the nominal interest rate at its original value of 6%).(d)Calculate the expected real after-tax interest rate if expected inflation increases to 5% (with the nominal interest rate at its original value of 6% and the tax rate at its original value of 30%).
What will be an ideal response?