Which of the following provides the strongest argument for young people making regular payments into a retirement program that invests these funds in a diverse set of stocks?
a. The prices of stocks tend to fluctuate more than the prices of bonds.
b. Over short periods of time, variation in the real rate of return of stocks is greater than bonds.
c. When held over lengthy periods like 30 or 40 years, historically, the rate of return on stocks has been both higher and less variable than that of bonds.
d. Lower interest rates will lead to higher bond prices.
C
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Sellers bear the entire incidence of a tax on a good. This outcome can occur if
A) supply is perfectly inelastic. B) the good is an inferior good. C) demand is perfectly inelastic. D) the demand curve is downward sloping and the supply curve is upward sloping. E) supply is perfectly elastic.
If an increase in the price of good X causes the demand for good Y to decrease, this indicates that
a. X and Y are complements. b. X and Y are substitutes. c. X and Y are unrelated. d. the demand for X is elastic, but the demand for Y is inelastic.