When the rate of interest in the economy falls, there will be
A. an increase in nominal Gross Domestic Product (GDP).
B. an increase in the market price of existing bonds.
C. a decrease in the transaction demand for money.
D. less investment by businesses.
Answer: B
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The above figure shows a housing market with a rent ceiling equal to $1,000. In this figure, what area is equal to the resources lost due to search?
A) area A B) area B C) area C D) area D E) area E
Price decreases always increase economic efficiency
a. True b. False Indicate whether the statement is true or false
Which of the following helps resolve the problem of corporate managers failing to work in the interests of stockholders when corporate ownership is separated from control?
a. A dominant stockholder can fire managers that fail to maximize corporate profit. b. If managers are paid a flat salary they will have a strong incentive to maximize corporate profit. c. Dissatisfied stockholders can "fire" the manager and the firm simply by selling their shares in the corporation, lowering the share price and making the firm an attractive takeover target for a reform-minded entrepreneur. d. A dominant stockholder can use discretion in distributing corporate profits among shareholders.
Some economists believe that higher marginal income tax rates __________ the incentive to work and thus shift the __________
A) increase; AD curve to the right B) increase; SRAS curve to the right C) increase; SRAS curve to the left D) decrease; AD curve to the left E) decrease; SRAS curve to the left