Suppose the government were to replace the income tax with a consumption tax so that interest on savings was not taxed. The result would be that the interest rate
a. and investment both would increase.
b. and investment both would decrease.
c. would increase and investment would decrease.
d. would decrease and investment would increase.
d
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Referring to Table 12.2, if the nominal interest rate is 3.5 percent and there is no inflation, which investments will be undertaken?
A) B, D, E B) D, E C) B, C, D, E D) C, E
If the market interest rate is 5% and a bank advertises loans at 12%, the bank will receive
A) no applications. B) applications from mostly low-risk borrowers. C) applications from mostly high-risk borrowers. D) a moral hazard.
A fixed exchange rate is:
a) set by the government. b) also called a floating exchange rate. c) determined in international currency exchange markets. d) set equal to the prime rate.
Which of the following is not a nondepository institution?
A. An insurance company B. A savings and loan C. A mutual fund company D. A pension fund