Eight years ago you purchased an asset for $100,000 that has yielded a nominal capital gain of $30,000. If you sold the asset today, your inflation-adjusted capital gains would be zero due to inflation over the last eight years. The capital gains tax is 28 percent. If you sold the asset today your tax liability would be
A. zero.
B. $28,000.
C. $8,400.
D. cannot be determined without more information.
Answer: C
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The reserve ratio is 10 percent. If the bank receives a customer deposit of $100,000, then an immediate effect is
A) a reduction in the bank's total assets of exactly $10,000. B) no change in the bank's total assets or total liabilities. C) a reduction in the bank's total liabilities of exactly $10,000. D) an increase in the bank's reserves of exactly $10,000.
A crucial difference between the impact of an import quota compared to a tariff is that:
A. import quotas generate revenue to the domestic government, but tariffs do not. B. import quotas generate no revenue to the domestic government, but tariffs do. C. tariffs increase the prices paid by domestic consumers, but quotas do not. D. both (a) and (c)
If the price of a good increases by one thousandth of 1% and the quantity demanded goes to zero, then at that price, the good is
A. perfectly inelastic. B. perfectly elastic. C. inelastic. D. non-responsive.
Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?
A) The supply of corn would decrease and the equilibrium price of corn would increase. B) The demand for corn would increase and the equilibrium price of corn would increase. C) The demand for corn would decrease because consumers could afford to buy less wheat and corn. D) The demand for corn would increase and the equilibrium price of corn would decrease.