Taxes for the most part are efficient because they retain incentives and align the values that buyers and sellers place on goods and services
a. True
b. False
Indicate whether the statement is true or false
False
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The equilibrium real interest rate is 5 percent. If the real interest rate is
A) anything other than 5 percent, the supply of loanable funds curve and/or the demand for loanable funds curve will shift to move the real interest rate to 5 percent. B) 6 percent, the demand for loanable funds curve will shift rightward as firms enter the market to borrow at the lower rate. C) 2 percent, there is a shortage of loanable funds. D) 8 percent, there is a surplus of loanable funds. E) 3 percent, then the supply of loanable funds curve will shift leftward as new savers enter the market.
Why might Congress benefit from the Fed being self-financed?
A) Self-financing increases Congressional control over the Fed. B) Self-financing reduces the Fed's exposure to external pressures. C) Self-financing gives the Fed an incentive to expand the money supply, which ultimately results in Congress having additional funds to spend. D) Congress does not benefit from the Fed being self-financed; Congress is obliged by the Constitution to allow the Fed to be self-financed.
In the United States, the main contributor to economic growth is due to the growth in
A) physical capital. B) education (human capital). C) labor resources. D) capital and labor productivity.
The value of a firm is
A. the price for which the firm can be sold minus the present value of the expected future profits. B. larger the higher is the risk premium used to compute the firm's value. C. smaller the higher is the risk premium used to compute the firm's value. D. both b and c