Alfonso, a citizen of Italy, decides to purchase bonds issued by Ireland instead of ones issued by the United States even though the Irish bonds have a higher risk of default. An economic reason for his decision might be that
a. he dislikes U.S. foreign policy.
b. the Irish bonds pay a higher rate of interest.
c. the U.S. government is more stable than the Irish government.
d. None of the above provide an economic reason for buying the riskier bond.
b
You might also like to view...
A Pigouvian tax is a tax designed to ________
A) induce consumers of a good to reduce the consumption of the good B) induce producers generating negative externalities to reduce production C) induce producers generating positive externalities to reduce production D) induce producers to stop the production of a good
The "law" of diminishing returns
a. is deduced from the basic biochemical relationship of agricultural theory. b. was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. c. is based on regular observations of input-output relationships over the last two centuries. d. is borrowed from physical laws related to conversion of matter and energy.