Compare the characteristics of loans and marketable securities in terms of liquidity, risk, and information costs
What will be an ideal response?
Loans are less liquid than marketable securities, have a higher default risk, and higher information costs.
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If four large commercial contractors meet and collude on the bids they are going to submit for a large government road contract, this is an example of ________.
A) bid suppression B) output restrictions C) bid rigging D) market division
Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point outside the PPF represents: a. a smaller quantity of consumer goods than that represented by a point inside the PPF. b. an inefficient output combination of the two goods
in the economy. c. an unattainable output combination of the two goods in the economy. d. an output combination of more consumer goods than capital goods. e. a smaller quantity of capital goods than that represented by a point inside the PPF.
The difference between a change in quantity supplied and a change in supply is that a change in:
a. quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. b. supply is caused by a change in a good's own, current price, while a change in the quantity supplied is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. c. quantity supplied is a change in the amount people want to sell, while a change in supply is a change in the amount they actually sell. d. supply and a change in the quantity supplied are the same thing.
When labor's marginal product rises because of a technological improvement, the demand for labor rises regardless of whether the improvement is permanent or temporary. When workers own capital, the technological improvement (whether permanent or temporary) also raises their nonlabor income, which causes the supply of labor to decrease. These two effects cause the wage to increase, while the effect on employment is ambiguous. However, if the improvement is temporary, there is a third effect-intertemporal substitution. In this case, workers recognize that the higher wage is only temporary, so workers adjust their work and vacation times, increasing their work effort during the present period of high wages and decreasing their future work effort. This intertemporal substitution causes an
increase in the supply of labor. If this increase in supply more than offsets the fall in supply caused by the nonlabor income effect, the temporary technological improvement will cause a rise in employment. (i) Compare and contrast the effects on the labor market of temporary and permanent increases in the payroll tax. (ii) Compare and contrast the effects on the labor market of imposing a payroll tax and an income tax.