Other things constant, an increase in interest rates will
A) increase your incentive to borrow.
B) increase your incentive to save.
C) increase your incentive to buy a new car on credit.
D) reduce your incentive to save.
B) increase your incentive to save.
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When nations attempt to move quickly from central planning to a market system, they face the obstacle of high transaction costs in large part because
A) market systems are unnatural and require careful design. B) people who have lived under socialism lack the basic skills a market system requires. C) people who have long lived under socialism are not sufficiently individualistic. D) the experience of socialism makes people distrustful of one another. E) they lack many of the institutions that develop over time in a market system.
Of the combined Social Security tax rate, _____ goes to pay for _____
a. 2.9; Medicaid b. 2.7; Medicare c. 2.9; Medicare d. 2.7; Medicaid
To obtain the market price of a good from its factor cost one must:
(a) Add indirect taxes and subtract subsidies. (b) Subtract indirect taxes and add subsidies. (c) Subtract both indirect taxes and subsidies. (d) Correctly cost all of the inputs used minus subsidies.
As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:
A. the income effect of a price change. B. a decrease in reservation price. C. a decrease in demand. D. the substitution effect of a price change.