Index funds are financial intermediaries, but municipal bonds are not
a. True
b. False
Indicate whether the statement is true or false
True
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To make child daycare more affordable, government advisors are debating two possible options. Plan A is to give daycare centers a $100 subsidy per month per child. Plan B is to give the parents $100 reduction in taxes per month per child in daycare. Which plan benefits parents more?
a. Plan A because it will increase the supply of childcare and decrease the price. b. Plan B because the $100 goes directly to the parents. c. The plans are equivalent in terms of their impact on the price minus subsidy paid by parents. d. Plan A because the price will fall, while under Plan B the price will rise.
If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss) the firm should
A) definitely produce the unit. B) shut down. C) not produce the unit but remain open. D) not produce the unit. Whether the firm should shut down or remain open cannot be determined without more information. E) produce the unit only if the price exceeds the average fixed cost.
Imperfect policy credibility implies that
A) traders may not believe that a central bank will do what it says. B) a central bank may intentionally undermine its policies. C) central bank authorities cannot be trusted. D) currency traders will often try to undermine central bank movements.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease