A tax on a specific good or service is called an ad valorem tax
a. True b. False
b
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The private sector balance is equal to savings ________ investment, and the government sector balance is equal to government expenditure ________ taxes. If there is a deficit in the private sector balance and a deficit in the government sector balance, then there must be a ________ in net exports.
A) plus; plus; surplus B) minus; minus; deficit C) minus; minus; surplus D) plus; plus; deficit E) plus; minus; surplus
Subprime mortgages refer to the mortgages issued
A) by low rating financial institutions. B) at an interest rate below prime rate. C) to borrowers with low incomes and poor credit histories. D) by government
Which of the following is correct?
a. Economic development is more quantitative than economic growth. b. A country cannot achieve economic growth with a limited base of natural resources. c. Infrastructure is capital provided by the private sector. d. All of the above are true. e. All of the above are false.
Consider an individual who plans to buy a new home. He has two options: (i) pay for mortgage insurance (that insures the lender in case the borrower defaults), or (ii) pay the lender a higher interest rate for the mortgage. Describe how these two options are related to the concept of risk premium and the lender's aversion to risk. Why does the interest rate on the mortgage differ in these two options?
What will be an ideal response?