Which bond would someone in a 35% tax bracket choose to buy: a municipal bond with an interest rate of 7% or a corporate bond with an interest rate of 10%?
What will be an ideal response?
The corporate bond returns 6.5% after taxes (0.65 × 10%). Thus, the investor is likely to choose the municipal bond since it offers a higher after-tax return.
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New Deal environmental policies included all of the following except:
a. withdrawal of much of the public domain from private entry. b. the use of the "soil bank" to encourage agricultural conservation. c. projects such as the TVA that simultaneously protected many resources in a region. d. the establishment of Yellowstone as a national park.
The consumer price index:
A. measures the increase in the cost of the market basket relative to the cost in a given base year. B. is always 100 in the final year of measurement. C. helps us understand why the cost of living today compares with the cost of living at some time in the past. D. is a perfect measure of how prices change for all goods and services in the economy.
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour. Assume that Sam has an upward-sloping labor supply curve. If the opportunity cost of Sam's leisure time increases, he will respond by working
a. more hours. b. fewer hours. c. an equal number of hours. d. a number of hours that cannot be determined from the information. The labor demand curve is needed to make this determination.
What happens to desired investment spending if the interest rate rises? Is this response relevant to the supply of loanable funds curve or the demand for loanable funds curve?