Other things the same, when the interest rate rises,
a. people would want to lend more, making the supply of loanable funds increase.
b. people would want to lend less, making the supply of loanable funds decrease.
c. people would want to lend more, making the quantity of loanable funds supplied increase.
d. people would want to lend less, making the quantity of loanable funds supplied decrease.
c
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A competitive equilibrium fails to be a Pareto Optimum with a distorting tax because
A) the consumer's budget constraint has an additional kink. B) the firm is no longer maximizing profits. C) the government wastes its revenue. D) the consumer faces a different effective wage than the firm.
Which of the following is not true regarding bonds? a. Bonds can be purchased from corporations as well as governments
b. Interest must be paid to bondholders before dividends are paid to stockholders. c. Bondholders face no risk from changing market interest rates on bonds that have a fixed interest rate. d. The capital gains on bonds are generally more limited than the capital gains on stocks.
Consider someone who borrows $10,000 to buy a car at a fixed interest rate of 9%. If inflation is 3% at the time the loan is made, what is the real interest rate at which the loan must be repaid, and to what level would the interest rate have to rise for the real interest rate on the loan to be zero?
a. 4.5%; 7.5% b. 6; 9% c. 8%; 10% d. 6; 12%
Superstars arise in markets in which every customer in the market is able to enjoy the good supplied by the