Professor Plum, who earns $100,000 per year, read in the paper today that the university pays its basketball coach one million dollars per year in exchange for his agreement to remain at the university for at least three more years. The coach earns more than Professor Plum because:
A. the demand for sporting events exceeds the demand for college degrees.
B. universities value sports more than academics.
C. the coach has more human capital than does Professor Plum.
D. the coach is able to earn economic rent due to his unique talents.
Answer: D
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In one of the earliest studies on the link between interest rates and money demand using United States data, James Tobin concluded that the demand for money is
A) sensitive to interest rates. B) not sensitive to interest rates. C) not sensitive to changes in income. D) not sensitive to changes in bond values.
All of the following are reasonable explanations of the labor productivity speed-up in the United States except
a. labor force quality. b. technological change. c. investment spending. d. research and development.
In the United States, the marginal tax rate on individual federal income tax
a. decreases as income increases. b. increases as income increases. c. is constant at all income levels. d. applies only to payroll taxes.