The concept of "lender of last resort" is that when
a. lending decreases, the Fed will be the last to resort to higher interest rates.
b. borrowing increases, the Fed will be the last to increase lending.
c. commercial banks are hesitant to lend, the Fed will step in and increase reserves.
d. a borrower has tried everyone else, the Fed will lend directly to them.
c
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Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000 What is the marginal and average tax rate for Family A?
A) marginal—10 percent; average—10 percent B) marginal—20 percent; average—10 percent C) marginal—25 percent; average—20 percent D) marginal—20 percent; average—25 percent
Frictional unemployment would increase when
A) migrant workers are unemployed after harvest season. B) the number of individuals who quit one job to find another increases. C) discouraged workers drop out of the work force. D) workers are replaced by machines in production.
Consider two projects. The first project pays benefits of $90 today and nothing else. The second project pays nothing today, nothing one year from now, but $100 two years from now. Which project would be preferred if the discount rate were 0%? What if the rate increased to 10%?
What will be an ideal response?
If the tax on a good is doubled, the deadweight loss of the tax
a. increases by 50 percent. b. doubles. c. triples. d. quadruples.