A government policy that makes investments prior to retirement tax exempt until retirement increases the amount saved at any given interest rate
What will be an ideal response?
True. Allowing investors to earn interest on the amount owed in taxes will shift out the supply curve of funds.
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Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will
A) increase, so that equilibrium price and equilibrium quantity will increase. B) decrease, so that equilibrium price and equilibrium quantity will increase. C) increase, so that equilibrium price will decrease and equilibrium quantity will increase. D) increase, but the new equilibrium price and quantity are indeterminate.
Why is the rate of deforestation frequently higher than would be socially optimal?
a. Forests generate benefits, such as oxygen production and erosion control, that go to those who harvest the trees. b. The increased demand for fossil fuels to replace biofuels is major driver of deforestation. c. Deforestation generates costs, such as soil erosion and reduced production of atmospheric oxygen, that are entirely borne by those who harvest the trees. d. Population pressure coupled with a lack of incentives to conserve open-access resources results in deforestation.