Everything else held constant, if the tax-exempt status of municipal bonds were eliminated, then
A) the interest rates on municipal bonds would still be less than the interest rate on Treasury bonds.
B) the interest rate on municipal bonds would equal the rate on Treasury bonds.
C) the interest rate on municipal bonds would exceed the rate on Treasury bonds.
D) the interest rates on municipal, Treasury, and corporate bonds would all increase.
C
You might also like to view...
The graph shows the market for ski chalets in Aspen. The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets. If the rent ceiling is set at $1,900 a week, then there is
A) a shortage of 3,000 chalets a week. B) a surplus of 3,000 chalets a week. C) neither a shortage nor surplus of chalets. D) a shortage of 6,000 chalets a week. E) a surplus of 6,000 chalets a week.
If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will
a. increase, and the price received by sellers will increase. b. increase, and the price received by sellers will not change. c. not change, and the price received by sellers will increase. d. not change, and the price received by sellers will not change.