Suppose a new contracting environment with an economic environment that looks more uncertain is considered. This new contract will result in:
A. a decrease in the marginal cost and a shorter optimal contract.
B. an increase in the marginal cost and a longer optimal contract.
C. an increase in the marginal cost and a shorter optimal contract.
D. a decrease in the marginal cost and a longer optimal contract.
Answer: C
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If real GDP is increasing more rapidly than the population, then: a. interest rates must be falling
b. the economy must be experiencing inflation. c. per capita real GDP will be increasing. d. per capita real GDP will be decreasing.
The Earned Income Tax Credit provides a tax credit or rebate to
a. businesses that undertake investment expenditures. b. taxpayers with incomes greater than $100,000. c. persons with low incomes who are working. d. single parent families when the parent stays home to take care of the children.