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If Assets Are Imperfect Substitutes, Then a Decrease in the Amount

question 57

Multiple Choice

If assets are imperfect substitutes, then a decrease in the amount of domestic currency bonds held by the public will ________ the risk premium and ________ the amount of domestic currency bonds held by the central bank.


Definitions:

Excise Tax

A specific type of tax levied on particular goods, services, or transactions, often included in the price of items such as gasoline, alcohol, and tobacco.

Taxable Income

The portion of an individual's or a corporation's income that is subject to taxes according to governmental regulations.

Marginal Tax Rate

The tax rate that applies to the next dollar of taxable income, indicating the percentage of any additional income that will be paid in taxes.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxes by the government, after all deductions and exemptions.

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