Commitment devices can be:
A. formal policies set up through an employer or third party.
B. a tool to help people avoid temptation.
C. an informal arrangement.
D. All of these statements are true.
Answer: D
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Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are
A) complements in consumption. B) both luxury goods. C) both inferior goods. D) substitutes in consumption.
If the discount rate is lowered further below the market interest rate, banks tend to
A) lend more to the Fed. B) lend less to the Fed. C) borrow more from the Fed. D) borrow less from the Fed.
Horizontal equity is a difficult concept to implement because
a. it is difficult to determine how unequally unequals should be treated. b. it is difficult to measure ability to pay. c. it is difficult to determine which people are equally situated. d. people object to the use of absolute tax liability instead of percentage of income.
A trade embargo harms
A. the target country and the non-embargoing countries. B. both the target country and the country initiating the embargo. C. only the target country. D. only the country that initiates the embargo.