Assume Joe invests a total of $10,000 in a company—$5,000 of which is his own money and $5,000 of which he borrowed at a 10 percent interest rate. If the company’s stock value decreases by 5 percent in one year at which time Joe sells his shares of the stock, what is Joe’s rate of return on his investment?
A. ?5 percent
B. ?10 percent
C. ?20 percent
D. ?30 percent
Answer: C
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The wage rate is the price of a unit of labor. What happens to the demand for labor if the wage rate increases?
A. It increases. B. It decreases. C. It does not change. D. Uncertain-economic theory has no answer to this question.
If the case study on U.S. / China trade is correct in its analysis of factor abundance,
A) Chinese capital owners should see their income rise as trade increases. B) U.S. skilled labor inputs should see their incomes fall as trade increases. C) U.S. capital owners should see their income fall as trade increases. D) Chinese unskilled labor should see their income rise as trade increases.
Which of the following would indicate that an income tax is progressive?
a. high-income people pay $3,000 . low-income people pay $1,000 b. low-income people pay $3,000 . high-income people pay $1,000 c. high-income and low-income people all pay $1000 each d. high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent e. both high-income and low-income people pay 10 percent of their income in taxes
The size of a tax distortion depends on how elastic the parties are to a transaction.
Answer the following statement true (T) or false (F)