What is one difference between stocks and bonds?
A) Bonds are purchased at a bank, while stocks are purchased through the federal government.
B) Bonds earn a higher rate of return than stocks.
C) Stocks earn a higher rate of return than bonds.
D) Stocks represent partial ownership in a firm, while bonds do not.
D
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A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises
Indicate whether the statement is true or false
If a non-renewable resource is scarce, has constant marginal cost of production, and is sold in a competitive market,
A) its price will increase over time. B) its price will exceed marginal cost. C) its price will increase by the rate of interest. D) All of the above.
Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
A) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity. B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery. C) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself. D) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology.
When the Fed attempts to increase real GDP and employment by ________ its target for the federal funds rate, it is conducting ________ monetary policy
A) raising; expansionary B) raising; contractionary C) lowering; expansionary D) lowering; contractionary