A rational choice is one that
A) must be made with perfect information.
B) is made in the social interest rather than the self-interest.
C) creates no costs for the decision maker.
D) always turns out for the best for the decision maker.
E) uses the available resources to most effectively satisfy the wants of the person making the choice.
E
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An income tax in which the average tax rate increases with income is called a
A) regressive income tax. B) proportional income tax. C) flat-rate income tax. D) progressive income tax.
Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his
checking account. If the interest rate on checking accounts is 4% and the interest rate on bonds is 9%, how much does Mr. Pierpont keep in his checking account? A) $50,000 B) $70,000 C) $130,000 D) $150,000