What happens when the interest rate on newly issued bonds increases?
a. The price of previously issued bonds with the lower rate decreases but still is higher than its face value.
b. The price of previously issued bonds with the lower rate does not change as the face value has not changed.
c. The price of previously issued bonds with the lower rate decreases to less than its face value.
d. The price of previously issued bonds with the lower rate increases to more than its face value.
c. The price of previously issued bonds with the lower rate decreases to less than its face value.
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Which of the following statements is true?
A) The command system is remarkable at providing price signals that guide resources in a way that maximizes social surplus. B) Market economies minimize waste and provide incentives to all market participants to promote their own interests. C) Coordination of different economic agents and bringing them together to trade is a central problem of a free market economy. D) The broader interests of societies are met more often under a command system in comparison to a market system.
Assume a unit tax of $4 is placed on suppliers. They are able to pass along some of the tax to suppliers as evidenced by prices rising from $5 per unit to $7 per unit. Output declines from 10 units to 8 units
What is the ratio of the demander's share of the tax burden to the suppliers? a. 2.5 b. 2.0 c. 1.5 d. 1.0
Moral hazard and adverse selection are both examples of
a. the principal-agent problem. b. externalities in consumption. c. efficiency in markets. d. perfect information. e. asymmetric information.
Under what circumstances would having multiple firms in a market result in higher prices for all customers?
A. Perfect competition B. Natural monopoly C. Price Discrimination D. Patented products