Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a corporation and the probability of default is believed to be high. Which of the following is correct?
a. Because they have the same term to maturity the interest rates should be the same.
b. Because of the differences in tax treatment and credit risk, the state bond should have the higher interest rate.
c. Because of the differences in tax treatment and credit risk, the corporate bond should have the higher interest rate.
d. It is not possible to say if one bond has a higher interest rate than the other.
c
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Which of the following is a recent trend in the labor market?
A) Low-skilled workers have lost jobs. B) The demand for high-skilled labor has increased as technology has increased. C) The wages of high-skilled labor have decreased. D) The marginal productivity of low-skilled workers has increased.
Banking began in
A. biblical times. B. medieval times. C. the 19th century. D. the 20th century.
If two countries participate in free trade:
A) every individual in each country will benefit. B) both countries as a whole may gain from the trade. C) one country will benefit, but the other country will experience reduced welfare.. D) neither country will benefit.
An increase in the real interest rate will:
a. Shift the consumption schedule upward b. Decrease the amount of investment spending c. Shift the investment demand curve to the right d. Shift the investment demand curve to the left b. Decrease the amount of investment spending