Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after-tax interest rate is
A) 4.0 percent. B) .5 percent. C) 2.0 percent. D) 1.0 percent. E) 3.5 percent.
C
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Milton Friedman's k-percent rule says to set the rate of growth of the quantity of money equal to
A) the real interest rate. B) a constant rate. C) the rate of growth of potential GDP. D) the unemployment rate. E) last year's growth rate of real GDP.
The law of demand (downward-sloping demand curve)is based on the idea of
a. maximum total utility b. minimum marginal utility c. total utility divided by quantity of the good consumed d. law of diminishing marginal utility e. consumers minimize total utility
Consumer surplus is:
A. the amount of purchasing power a consumer receives when the price of a good falls. B. the amount of money that exactly compensates a consumer for a change in circumstances. C. the net benefit a consumer receives from participating in the market for some good. D. negative whenever the price of a good increases.
A tax placed on buyers of tuxedoes shifts the
a. demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to increase. b. demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease. c. supply curve for tuxedoes upward, decreasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to increase. d. supply curve for tuxedoes upward, increasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to decrease.