Which of the following is true concerning interest rates on bonds?
a. The tax treatment of interest earned on municipals bonds makes the interest rate on them higher than otherwise. High default risk makes the interest rate on a bond higher than otherwise.
b. The tax treatment of interest earned on municipals bonds makes the interest rate on them higher than otherwise. High default risk makes the interest rate on a bond lower than otherwise.
c. The tax treatment of interest earned on municipals bonds makes the interest rate on them lower than otherwise. High default risk makes the interest rate on a bond higher than otherwise.
d. The tax treatment of interest earned on municipals bonds makes the interest rate on them lower than otherwise. High default risk makes the interest rate on a bond lower than otherwise.
c
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An open economy is one in which exports and imports constitute a large share of GDP.
Answer the following statement true (T) or false (F)
The widespread adoption of computers in the workplace has likely led to
A) an increase in labor productivity because computers are a capital good. B) a decrease in labor productivity because computers are a capital good. C) an increase in the supply of labor because people are needed to operate the computers. D) no change in the quantity of labor hours. E) a decrease in human capital because computers are physical capital.
A perfectly competitive firm can
A) sell all of its output at the prevailing market price. B) set a higher price to customers who are willing to pay more. C) raise its price in order to increase its total revenue. D) sell additional output only by lowering its price. E) usually not sell all the output it produces, but still "over-produces" because there are some periods when it can sell the extra output at very profitable prices.
The ability of the federal government to regulate the distribution of income among families and individuals is
A) enormous, as shown by the redistribution that has occurred from the rich to the poor since World War II. B) largely limited to what can be accomplished through revisions in the rules of the game. C) unlimited because government is sovereign. D) virtually unlimited because few people would be willing to emigrate merely in order to escape taxation.