The demand for U.S. government bonds is high relative to other bond issues because:
A. liquidity of other bond issues is high relative to U.S. government bonds.
B. market for U.S. government bonds is more liquid than most if not all other bond markets.
C. U.S. bond market has low transaction spreads due to high illiquidity.
D. U.S. government bonds have higher default.
Answer: B
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Which of the following is a likely outcome of rent ceilings?
A) a surplus of rent-controlled housing B) waiting lists of potential renters of rent-controlled housing C) construction of more rental housing D) black market rents below the ceiling rent
Shin likes to spend a (relatively small) portion of his income on vacations to Cabo San Lucas (a popular resort area in Mexico)
On these trips, he either stays at a four star resort with panoramic ocean views or a more modest, and slightly deteriorating hotel in the noisy part of town. Understandably, the four star hotel is significantly more expensive. Suppose that the four-star hotel costs $5000/trip while the hotel costs just $500/trip. In recent years, the price of airfare has risen significantly, a change that effects the cost of his trips the same regardless of where he stays. Suppose that airfare has increased from $300/trip to $1000/trip. Why is it that following the higher travels prices, Shin is likely to spend more of his vacations at the four star resort when he travels. (Assume that the hotel rates and Shin's preferences are fixed).