The market for bonds is initially described by the supply of bonds - S0, and the demand for bonds - D0, with the equilibrium price and quantity being P0 and Q0. If the federal government were to offer larger tax breaks on the purchase of new equipment for businesses, all other factors constant, we would expect to see:
A. Bond supply curve to shift to S1
B. Bond demand curve to shift to D2
C. Bond demand curve to shift to D1
D. Bond supply curve to shift to S2
Answer: A
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If government raised taxes on the rich and this resulted in a decrease in productivity, the increase in taxes will still definitely make society better off
Indicate whether the statement is true or false
If the Federal Open Market Committee decides to expand the money supply, then it will
A. raise the discount rate to member banks. B. issue directions to purchase government securities, thus putting more reserves in member banks. C. issue directions to sell government securities, thus taking reserves from member banks. D. order new Federal Reserve notes delivered to member banks.
Compounding refers directly to
a. finding the present value of a future sum of money. b. finding the future value of a present sum of money. c. changes in the interest rate over time on a bank account or a similar savings vehicle. d. interest being earned on previously-earned interest.
Why is the use of theory and observation more difficult in economics than in sciences such as physics?
a) It is difficult to evaluate an economic experiment. b) It is difficult to devise an economic experiment. c) It is difficult to actually perform an experiment in an economic system. d) It is difficult to collect sufficient data.