Suppose the nominal interest rate is 5 percent, the tax rate on interest income is 30 percent, and the after-tax real interest rate is 2.1percent. Then the inflation rate is 2 percent
a. True
b. False
Indicate whether the statement is true or false
False
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In an inflationary environment, then over time
A) a specific tariff will tend to raise more revenue than an ad valorem tariff. B) an ad valorem tariff will tend to raise more revenue than a specific tariff. C) an optimum tariff will tend to raise more revenue than an escalating tariff. D) a tariff quota will tend to raise more revenue than a specific tariff. E) an import quota would raise more revenue than a specific tariff.
Many countries in Latin America experienced raging _________________ during the years of the 1980s and early 1990s with inflation rates often well above 100% per year.
a. deflation b. hyperinflation c. growth d. stagnation
During the housing boom, the demand for mortgage-backed securities in the global market ______.
a. was very low b. was very high c. stemmed from high interest rates d. was eliminated by tariffs
Figure 16.1A firm that generates pollution is illustrated in Figure 16.1. If the government imposes a pollution tax equal to P2 and the firm chooses abatement level A3:
A. the marginal cost of abating is greater than the marginal benefit of abating. B. the marginal benefit of abating is greater than the marginal cost of abating. C. the firm is choosing optimally. D. the firm is in violation of environmental protection laws.