If there is an excess supply of bonds at a given price of bonds, then
A) the interest rate will fall.
B) the interest rate will rise.
C) the price of bonds will fall.
D) the interest rate may rise or the interest rate may fall depending upon the reasons for the excess demand for bonds.
B
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Refer to Sales Tax. After the tax is imposed, the deadweight loss is equal to
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + D + G.
b. area F + G + H.
c. area E + H.
d. area E + H + J.
A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.
Answer the following statement true (T) or false (F)
An increase in the price of a particular bond implies an increase in the interest rate for that bond.
Answer the following statement true (T) or false (F)
On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then
a. an apple costs twice as much as a light bulb. b. the opportunity cost of a light bulb is 2 apples. c. the opportunity cost of an apple is one-half of a light bulb. d. All of the above are correct.