A change in which of the following variables would affect the cash flow for a firm?
A) changes in the nominal interest rate
B) expected future profit
C) changes in the real interest rate
D) changes in expected inflation
E) none of the above
E
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"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise." These statements
a. are essentially correct. b. contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand. c. contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand. d. contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand) for large cars.
Income taxes and property taxes generate the highest tax revenue for state and local governments
a. True b. False Indicate whether the statement is true or false