Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)U.S.Treasury securities are widely regarded to be risk-free because there is virtually no chance the government will default on these bonds.
• B)In general,if the interest rate is r and the tax rate is τ,then for each $1 invested you will earn interest equal to r and owe taxes of τ × r on the interest.
• C)Investors may receive less than the stated interest rate if the borrowing company has financial difficulties and is unable to fully repay the loan.
• D)Taxes reduce the amount of interest the investor can keep,and we refer to this reduced amount as the tax effective interest rate.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive due to market price.

Good X

An unspecified product or commodity in economics, used in theoretical models and discussions.

Producer Surplus

The difference between the actual price producers receive for a product and the minimum price they would accept.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity supplied by producers.