When externalities are present, market prices do not reflect all the social costs or benefits of the activity
a. True
b. False
A
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If real interest rates decrease, we generally expect
A. saving to increase. B. saving to decrease. C. consumption spending to decrease. D. no significant change in saving.
The incidence of sales tax is determined by the
A) level of government (for example, local, state, or federal) which imposes the tax. B) federal government in all cases. C) greed of the sellers. D) price elasticities of supply and demand.
If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S. Treasury,
A) the monetary base will decline by $1 billion. B) the monetary base will rise by $1 billion. C) the Fed has conducted an unsterilized foreign-exchange intervention. D) the Fed has conducted a sterilized foreign-exchange intervention.
All of the following are advantages of a corporation EXCEPT
A) double taxation. B) limited liability. C) ability to raise large sums of financial capital. D) unlimited life.