Everything Else Held Constant,the Interest Rate on Municipal Bonds Rises

question 78

Multiple Choice

Everything else held constant,the interest rate on municipal bonds rises relative to the interest rate on Treasury securities when

• A)income tax rates are lowered.
• B)income tax rates are raised.
• C)municipal bonds become more widely traded.
• D)corporate bonds become riskier.

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Definitions:

Quantity Purchased

The total number of units of a product or service bought by consumers in a specified period.

Price Elasticity

The evaluation of demand's reaction to fluctuations in the price of a particular good.

Responsiveness

The degree to which a variable responds to a change in an underlying factor, often used in economic contexts to describe changes in supply, demand, price, etc.

Price Elasticity

A measure of how much the quantity demanded or supplied of a product changes in response to a change in its price.