Suppose the IRS were to introduce a tax exemption for portion of interest income earned on corporate bonds. This would
A) reduce the user cost of capital.
B) raise the marginal product capital.
C) raise the rate of depreciation.
D) All of the above are correct.
A
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If a used-car dealer enjoys economic profits, then
A) as a group, its customers necessarily suffered a like amount in economic losses. B) as a group, its customers were necessarily made worse off. C) as a group, its competitors necessarily suffered economic losses. D) all of the above are true. E) none of the above is true.
The situation in which investors choose to put their funds in a safe asset during uncertain times is known as
A) hedging. B) speculation. C) flight to quality. D) arbitrage.
Intermediation entities include which of the following?
(a) Life and fire insurance companies (b) Stock exchanges (c) Mutual saving banks (d) All of the above
If there is a leftward shift of the money demand curve, which of the following should the Fed do if it wants to keep output stable?
a. Lower its interest rate target b. Sell bonds in the open market c. Wait, since output usually does not change when the money demand curve shifts d. Raise its interest rate target e. Buy bonds in the open market