Suppose one year ago the price index was 120 and Maria purchased $20,000 worth of bonds. One year later the price index is 126 . Maria redeems her bonds for $22,700 and is in a 40 percent tax bracket. What is Maria's real after-tax rate of interest to the nearest tenth of a percent?
a. 5.1 percent
b. 3.1 percent
c. 2.1 percent
d. 2.4 percent
b
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Refer to Figure 4-2. What area represents producer surplus at a price of P1?
A) A + C B) A + C + E C) C D) C + E
A cartel is
a. a group of firms promoting competition. b. most common in monopolistic competition. c. a collusive group of firms. d. no longer possible in our global economy.
Why is it that the private market fails to provide the efficient quantity of a public good?
a. because it is impossible to force those who benefit from the good to pay for it b. because public goods are always large-scale projects that require government financing c. because there are external costs associated with the provision of a public good d. because there are uninsurable risks associated with a public good
If real income rises from $5 trillion to $5.3 trillion while the price level increases by 10 percent, it follows that nominal income:
A. rises by 6 percent. B. rises by 16 percent. C. rises by 10 percent. D. doesn't change.