The issue of bonds in corporate financing
A. is cheaper than stocks in the long run to the issuer.
B. is riskier than stocks to the issuer.
C. commits the issuer to make fixed annual payments even if profits are negative.
D. All of these responses are correct.
Answer: D
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Refer to Figure 6.8. If your city imposes a tax of $100 per apartment:
A. consumers take the entire burden of the tax. B. landlords take the entire burden of the tax. C. consumers pay $60 and landlords pay $40 tax per apartment. D. consumers pay $40 and landlords pay $60 tax per apartment.
The socially optimal amount of pollution moderation occurs where society's marginal:
A) bene?t of moderation exceeds its marginal cost of moderation by the greatest amount. B) bene?t of moderation equals its marginal cost of moderation. C) cost of moderation is at its maximum. D) bene?t of moderation is zero.
Direct expenditure offsets are
A) the discretionary changing of government expenditures to achieve a higher employment level. B) the decrease in planned investment that occurs as the result of an increase in interest rates. C) the same as the Ricardian equivalence theorem. D) the decrease in spending in the private sector in areas in which the government is competing.
Banks' borrowed funds come mostly from:
A. Buying bonds and loans B. Buying stocks and selling Treasury bonds C. Issuing stocks and buying Treasury bonds D. Issuing bonds and accepting deposits