Municipal bonds have default risk, yet their interest rates are lower than the rates on default-free Treasury bonds. This suggests that
A) the benefit from the tax-exempt status of municipal bonds is less than their default risk.
B) the benefit from the tax-exempt status of municipal bonds equals their default risk.
C) the benefit from the tax-exempt status of municipal bonds exceeds their default risk.
D) Treasury bonds are not default-free.
C
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If the U.S. government can run chronic budget deficits, why can't state governments do the same?
A) Conservatives have more power in state legislatures than in the U.S. Congress. B) Voters do not believe in budget deficits and they control state governments. C) Most states have no income tax. D) State constitutions require balanced budgets. E) States must rely on taxation for the funds to repay creditors.
Tom has a PhD in history and teaches at the local college where he earns $75,000 a year. Truth be told, Tom loves teaching so much, he would gladly do it for $45,000. Which of the following can be said?
A. Tom's economic rent is worth $30,000. B. Tom's producer surplus is worth $30,000. C. The value of Tom's marginal product is $75,000. D. All of these statements are true.
The branch of knowledge concerned with the production, consumption, and transfer of wealth.
Other things equal, the combination of a ________ saving rate and a ________ real interest rate will result in the largest accumulation of wealth over time.
A. high; high B. high; low C. low; high D. high; zero