The spread between the interest rates on bonds with default risk and default-free bonds is called the
A) risk premium.
B) junk margin.
C) bond margin.
D) default premium.
A
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Which of the following is likely to arise in a market with asymmetric information?
A) Moral hazard B) A pecuniary externality C) A positive externality D) A prisoners' dilemma
The tax reforms of the 1980s
a. increased the percent of personal income taxed b. shifted most the tax burden onto the corporation c. reduced federal, state and local sales taxes d. reduced tax brackets and the marginal tax rates within the brackets e. resulted in reducing government deficits
Profit can be maximized only where marginal revenue equals
a. average cost. b. total cost. c. marginal cost. d. average cost.
Which of the following statements helps to explain why government drug interdiction increases drug-related crime?
a. The direct impact is on buyers, not sellers. b. Successful drug interdiction policies reduce the demand for illegal drugs. c. Drug addicts will have an even greater need for quick cash to support their habits. d. In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs.