Which are contractionary fiscal policies?
a. Increased taxation and decreased government spending
b. Increased taxation and increased government spending
c. No change in taxation and increased government spending
d. Decreased taxation and no change in government spending
Answer: a. Increased taxation and decreased government spending
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Which of the following institutions within the Federal Reserve System determines how many government securities the Fed should buy or sell on a given day?
A) the Federal Reserve Bank of Chicago's Board of Trade. B) the Board of Governors. C) Federal Advisory Committee. D) the Federal Reserve Bank of New York's Trading Desk.
Anything of value owned by a person or a firm is
A) an asset. B) owner's yield. C) a liability. D) wealth.
Answer the following statements true (T) or false (F)
1. In the long run, under conditions of perfect competition, economic profits are eventually eliminated. 2. If the entry of new firms substantially raises demand for resources, two forces tend to eliminate economic profit in the long run: upward pressure on cost and downward pressure on price. 3. The more that firms advertise, the closer they get to perfect competition. 4. The lowest possible ATC curve is attained at the optimal scale of output. 5. If price equals marginal cost at the long-run equilibrium, this means that economic efficiency is being achieved.
Suppose you purchase a $1,000 bond that bears an interest rate of 10 percent. What will happen if the interest rate goes to 20 percent?
a. The market price of the bond will increase to $2000. b. The market price of the bond will drop to $500. c. The return on the bond will double. d. The return on the bond will halve.