Municipal bonds pay a relatively
a. low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax.
b. low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.
c. high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay.
d. high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.
b
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In a large country case, an optimal tariff is one for which the terms-of-trade gain exceeds the:
a. producer surplus. b. increased price of the product imported. c. deadweight loss. d. consumer surplus.
In a decision tree, the difference between a decision node and a terminal node is that
A) at a decision node all participants make the same decision, while at a terminal node different players may make different decisions. B) at a decision node a decision must be made, while a terminal node shows the payoff. C) at a decision node a decision must be made, while at a terminal node the final decision must be made. D) at a decision node all participants are free to make individual decisions but at a terminal node they must agree on a collective decision.