Double taxation of saving may
A. reduce the saving rate.
B. increase the budget deficit.
C. increase the rate of economic growth.
D. increase the rate of investment.
Answer: A
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If expectations are adaptive, how will the economy adjust to a new long-run equilibrium in response to expansionary monetary policy? Support your answer with a graph of the Phillips curve
What will be an ideal response?
After Hurricane Katrina, there was considerable public outrage that many of the properties were not insured against flooding although they were insured against wind damage. What might explain these different approaches to insurance?
A) The risk of wind damage is potentially diversifiable, but the risk of flooding is not. B) The risk of flood damage is potentially diversifiable, but the risk of wind damage is not. C) predatory insurance policies D) Neither the risk of wind damage or the risk of flooding is diversifiable.
At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n):
A. decrease in the quantity of apartments supplied. B. increase in the demand for apartments. C. increase in the supply of apartments. D. decrease in the quantity of apartments demanded.
The risk spread:
A. is always constant. B. should have an inverse relationship with the bond's yield. C. should have a direct relationship with the bond's price. D. is also known as the default-risk premium.