Other things equal, an increase in the tax on dividends is likely to result in all of the following EXCEPT:
A) higher expected return on bonds relative to stocks
B) increased demand for bonds
C) lower interest rates
D) higher interest rates
D
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Which of the following CORRECTLY characterize principals and agents in important examples of the principal-agent problem?
A) In the doctor/patient relationship, the patient is the principal and the doctor is the agent. B) In the lawyer/client relationship, the client is the principal and the lawyer is the agent. C) Both of the above answers are correct. D) Neither of the above answers is correct.
Recognition lags in fiscal policy stem largely from
A) the fact that it takes time before a fiscal policy, such as a change in government purchases or a change in taxes, is agreed to and put into effect. B) the fact that it takes time for a policy action to have its full effect on aggregate demand. C) the difficulty of collecting economic data in a timely and accurate fashion. D) households and businesses may not respond to fiscal policy to the extent that policy makers had hoped, for example, they may not be as responsive to a tax cut .