When you purchase a bond in the secondary market, you are lending money directly to the borrower
a. True
b. False
Indicate whether the statement is true or false
False
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The above figure shows the demand curves in four different markets. If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?
A) A B) B C) C D) D E) C and D
Assume (other things constant) that the Fed increases the money supply. The mechanism through which aggregate demand increases is, according to interest-rate-based transmission mechanism, summarized as follows:
A) the money supply increases ? there is a drop in money balances held ? interest rates increase ? planned investment spending decreases ? aggregate demand increases. B) increase in money supply ? increase in money balances held ? decrease in interest rates ? decrease in planned investment spending ? increase in aggregate demand. C) increase in money supply ? decrease in money balances held ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand. D) increase in money supply ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand.
If Rita's labor-supply curve is downward-sloping, then for Rita a. an increase in the wage creates an income effect that is greater than the substitution effect. b. an increase in the wage creates a substitution effect that is greater than the income effect. c. leisure and consumption are perfect substitutes
d. leisure and consumption are perfect complements.
Expansionary fiscal policy leads to an increase in net exports, all other things unchanged.
a. true b. false