Which group is hurt by inflation being less than expected?
A) holders of TIPS
B) lenders of fixed-rate mortgages
C) borrowers with fixed-rate mortgages
D) all of the above
C
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An important function of secondary markets is to
A) make it easier to sell financial instruments to raise funds. B) raise funds for corporations through the sale of securities. C) make it easier for governments to raise taxes. D) create a market for newly constructed houses.
A car dealership union negotiates a contract that dramatically increases all salesmen's salaries. If one of the salesman is thinking of changing careers to be a hardware salesman, his opportunity cost
a. would not be affected b. of becoming a hardware salesman would decrease c. of becoming a hardware salesman would increase d. none of the above
When the Social Security system enters its deficit years and the bonds held in the trust fund are drawn down,
a. overall taxes will be reduced as the trust funds are used to pay benefits to retirees. b. the payroll taxes used to finance Social Security benefits can be reduced because the trust funds will be sufficient to pay the retirement benefits of the baby boom generation. c. taxes will have to be raised (or additional funds will have to be borrowed) in order to redeem the bonds held in the trust fund. d. income taxes will have to be reduced in order to keep the revenues and expenditures of the Social Security system in balance.
If the cross price elasticity of demand between two goods is? negative, then the two goods are
A) substitutes.
B) complements.
C) unrelated.
D) independent.