The yield curve generally slopes upward because
A. shorter maturity bonds have more default risk.
B. longer maturity bonds typically pay higher interest rates than shorter maturity bonds.
C. longer maturity bonds are not taxable.
D. longer maturity bonds typically pay lower interest rates than shorter maturity bonds.
Answer: B
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If marginal benefit is less than marginal cost, output is inefficiently high
Indicate whether the statement is true or false
Workers are generally in a better position to protect themselves from inflation in comparison to retired persons because workers' incomes
a. are more likely to be fixed. b. are more likely to be variable. c. always rise during inflation. d. are guaranteed by the federal government.
The Keynesian perspective on the effect of an increase in taxes is that this policy action
A. generates reductions in consumption and an increase in saving to pay for the new taxes. B. increases current consumption and reduces future consumption. C. generates reductions in consumption and in saving. D. has no impact on consumption.
Taxes:
A. cause the price consumers pay to equal the price suppliers receive. B. create a wedge between the price consumers pay and the price suppliers receive. C. cause the equilibrium quantity to increase. D. cause market shortages.