How is the foreign exchange market similar to the stock market?
What will be an ideal response?
Both markets are dominated by traders, rather than consumers (or producers) of the items bought and sold. Transaction costs are low and close substitutes abound, so transactions are frequent, and participants respond quickly to anything that influences their incentive to hold more or less. Though "fundamentals" matter, transactions are heavily influenced, also, by what other participants are doing or are expected to do. The result of all this is that prices are volatile and unpredictable.
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Which of the following policies would be expected to increase private saving?
A. Reducing the tax rate on capital gains and dividends. B. Increasing the income tax. C. Increasing job security. D. Providing more generous Social Security retirement benefits.
According to the Solow model, a benefit of policies to limit population growth might be ________
A) that smaller families are more likely to contribute to technological advances B) that smaller families have better access to birth control methods and devices C) that smaller families might provide each person a larger share of national income D) that smaller families have less need to save, and so enjoy higher consumption
Use the above figure. Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing. This would lead to
A) losses, which would drive the monopolist out of business in the long run. B) profits, which would encourage new producers to enter the industry in the long run. C) profits, but new firms cannot enter the industry in the long run due to high barriers to entry. D) losses, which would encourage the monopolist to lower costs in the long run.
Which of the following activities would be considered tax avoidance?
a. increasing your level of charitable contributions in December b. selling illegal drugs on the street c. underestimating your income that is subject to taxation d. failure of a waitress to report all tips earned on the job e. buying a house and neglecting to deduct interest payments