In the short run if the tax rate on asset income rises, then in the market clearing model:
a. household current consumption will rise compared to future consumption.
b. the after tax real interest rate rises.
c. current investment will rise.
d. all of the above.
Answer: a. household current consumption will rise compared to future consumption.
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A difference between a share of stock in a corporation and a corporate bond is that
A) the share of stock is a legal claim while the bond is not. B) the bond owner has voting rights within the corporation whereas the stockholder does not. C) the bond owner is entitled to receive a fixed annual coupon payment plus a lump-sum payment at the bond's maturity date, whereas the stockholder is entitled to a share of future profits. D) stocks are issued in return for funds that are lent to the corporation.
Forward-looking parents can reverse the adverse effects of government debt by saving more and leaving a larger bequest to their children
a. True b. False Indicate whether the statement is true or false
The long run is a planning period:
A. during which the firm can vary all inputs including its plant size. B. less than six months. C. less than one year. D. less than five years.
Industry A comprises only very few large firms engaged in stiff competition with each other. Industry A can best be described as
A) pure competition. B) monopolistic competition. C) pure monopoly. D) oligopoly.