Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to
a. shift other forms of debt to their home mortgage.
b. increase the equity in their house.
c. make larger payments and pay down their mortgage loan more rapidly.
d. decrease the overall amount of household debt in relation to household income.
A
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A legal monopoly is defined as a market where
A) only one lawyer operates. B) a legal barrier to entry exists. C) only one firm could earn a profit. D) entry and exit are legal.
Refer to Scenario 1-2. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much?
A) Its profit would be $500 lower. B) Its profit would be $500 higher. C) Its profit would be $1,000 higher. D) Its profit would be $1,500 lower.
An increase in the actual rate of inflation is most likely to cause a decrease in ________
A) the ex post real interest rate B) the ex ante real interest rate C) the nominal interest rate D) the expected real interest rate E) none of the above
When a country imposes a trade restriction, the real exchange rate of that country's currency appreciates
a. True b. False Indicate whether the statement is true or false