A proposed increase in the federal income tax rate should:
A. have no impact on the slope of the yield curve since the tax laws impact all maturities the same.
B. cause the slope of the yield curve to become negative.
C. flatten the yield curve.
D. increase the slope of the yield curve since it increases the risk premium of longer maturities.
Answer: A
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Each point on a supply curve represents
A) the highest price buyers will pay for the good. B) the lowest price for which a supplier can profitably sell another unit. C) the lowest price buyers will accept per unit of the good. D) the highest price sellers can get for each unit over time.
There is an old saying that "The proof of the pudding is in the eating," which means that by definition good decisions work out well and poor decisions work out badly. This question asks you to consider this the wisdom of this saying
a. Your friends live in a city where it often rains in May. Nonetheless, they plan a May outdoor wedding and have no backup plan if it does rain. The weather turns out to be lovely on their wedding day. Do you think your friends were being rational when they made their wedding plans? Explain. b. You usually have to see a doctor several times each year. You decided to buy health insurance at the start of last year. It turns out you were never sick last year and never had to go the doctor. Do you think you were being rational when you decided to buy health insurance? Explain. c. Given your answers to the first two parts of this question, do you agree or disagree that "The proof of the pudding is in the eating?" Explain.
A firm facing a horizontal demand curve: a. cannot affect the price it receives for its output
b. is unlikely to price its goods below market price. c. faces a perfectly elastic demand curve for its product. d. is characterized by all of the above.
The trade feedback effect includes which of the following steps?
A. an increase in U.S. economic activity stimulates U.S. imports B. an increase in foreign imports stimulates U.S. exports C. an increase in U.S. exports stimulates U.S. economic activity D. all of the above