If an individual is taxed at a 17 percent rate for each extra dollar earned, the reference is to the
A. Average tax rate.
B. Effective tax rate.
C. Nominal tax rate.
D. Marginal tax rate.
Answer: D
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George purchased a $10,000 bond that pays a nominal interest rate of 8 percent per year. George's marginal income tax rate is 28 percent. Over the last year, inflation was 3 percent
Find George's before-tax real interest rate and his after-tax real interest rate.
The value at which one currency can be exchanged for another currency is called the real exchange rate
Indicate whether the statement is true or false
If a regulator forced a natural monopolist to set P = MC
A) the monopolist would earn economic profits. B) the monopolist would suffer economic losses. C) the monopolist would break even. D) the monopolist would earn monopolistic profits.
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The real risk-free interest rate rises and nominal value of the domestic currency falls. b. The real risk-free interest rate falls and nominal value of the domestic currency falls. c. The real risk-free interest rate and nominal value of the domestic currency remain the same. d. The real risk-free interest rate rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.