Why are foreign investors more likely to invest in U.S. government bonds than in U.S. corporate stocks and bonds?
What will be an ideal response?
Foreign investors are more likely to buy government bonds than corporate bonds or stocks because it is widely believed that U.S. government securities are largely free from default risk. That is, most investors believe it is unlikely that the U.S. government will fail to make the interest payments due on the bonds. In addition, some foreign investors may consider it less likely to cause political problems if they buy securities issued by the U.S. government rather than securities issued by U.S. corporations.
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An economic problem with using subsidies or price ceilings to move a monopoly toward the competitive equilibrium is that
a. it may increase monopoly profits. b. it may decrease monopoly profits. c. policy makers may not be able to determine what the competitive equilibrium is. d. policy makers always need to be lobbied before taking any actions.
The parable called the Tragedy of the Commons applies to goods such as
a. fire protection and cable TV. b. tornado sirens and basic research. c. clean air and clean water. d. antipoverty programs and national defense.
When one side of a market knows more about a product than the other side, the moral hazard problem is experienced
Indicate whether the statement is true or false
Price ceiling is a legally established ______ price.
a. minimum b. maximum c. equilibrium d. indeterminate