A permanent increase of borrowing by the U.S. Treasury to finance growing budget deficits will:
A. result in U.S. Treasury yields being higher than high-grade corporate bonds.
B. result in lower yields on corporate bonds.
C. cause the yield on U.S. Treasury bonds to increase, but still be lower than corporate bonds.
D. result in the price of U.S. Treasury bonds rising.
Answer: C
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Suppose the marginal product of labor in the economy is given by MPN = 0.002(16,000 - N), while the supply of labor is 1000 + 1000w
(a) Find the market-clearing real wage rate and level of employment. (b) What happens to the wage rate and employment if wealth rises, reducing the supply of labor to 500 + 1000w? (c) What happens to the wage rate and employment if after wealth has risen as in part (b), there is a productivity shock that increases the marginal product of labor to MPN = 0.0025(16,000 - N)?
Limited liability can best be defined as the legal provision that
A) shields owners of a corporation from losing more than what they invested in a firm. B) protects bond holders from being sued by other creditors. C) gives holders of preferred stock priority over holders of common stock. D) reduces the exposure of sole proprietorships to law suits.
Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as
a. rational maximizers. b. satisficers. c. independent thinkers. d. signalers.
Refer to the information provided in Table 14.6 below to answer the question that follows. Table 14.6B's Strategy ?AdvertiseDon't Advertise??A's profit $150 millionA's profit $400 million?AdvertiseB's profit $150 millionB's profit $100 millionA's Strategy????Don'tA's profit $100 millionA's profit $200 million?AdvertiseB's profit $400 millionB's profit $200 millionRefer to Table 14.6. The result of this game is known as a
A. repeated strategy. B. collusive outcome. C. prisoners' dilemma. D. tit-for-tat outcome.