Suppose That Savers Become Much More Willing to Purchase a Certain

question 39

Multiple Choice

Suppose that savers become much more willing to purchase a certain type of municipal bond. The result will be that the bond's price will

• A)fall relative to the price of U.S. Treasury securities but rise relative to the price of corporate bonds.
• B)rise relative to the price of U.S. Treasury securities but fall relative to the price of corporate bonds.
• C)rise relative to the prices of U.S. Treasury securities and corporate bonds.
• D)fall relative to the prices of U.S. Treasury securities and corporate bonds.

---

Definitions:

Excise Taxes

Taxes applied to specific goods, services, or transactions, often included in the price of products like tobacco, alcohol, and gasoline, aimed at reducing their consumption or raising revenue.

General Sales Tax

A tax imposed on sales transactions, applied to the sale of most goods and some services, and usually calculated as a percentage of the sales price.

Marginal Tax Rate

Refers to the rate at which the last dollar of income is taxed, indicating the impact of an additional dollar of income on tax liability.

Marginal Tax Rate

is the rate at which the next dollar of income will be taxed, reflecting the percentage of additional income that is paid in tax.