A bond with a $90,000 face value sells at a $10,000 discount one year prior to maturity. What is the nominal interest rate paid by the bond?
a. 8.0%.
b. 8.9%.
c. 11.1%.
d. 12.5%.
d. 12.5%.
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In the United States, consumers usually pay ________ than the true cost of medical treatment because of ________
A) more; adverse selection B) less; rising insurance deductibles C) less; third-party payers D) more; rising insurance premiums
Economists assume that business firms attempt to maximize their profits
a. True b. False Indicate whether the statement is true or false
Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions. Such a tax increase would be devastating to people who commute significant distances to work. In fact, it would provide an incentive to relocate closer to work or change jobs. Economists refer to such effects of taxes as the
a. burden of a tax. b. regressive incidence of a tax. c. incidence of a tax. d. excess burden of a tax.
When the actual rate of inflation exceeds the expected rate:
A. the unemployment rate will temporarily rise. B. firms will experience rising profits and thus increase their employment. C. the actual rate of inflation will fall. D. nominal wages will decline.