If the government raised taxes and reduced government spending in order to reduce the budget deficit, monetary policy could accommodate this policy by
a. increasing money demand.
b. increasing money supply.
c. decreasing money supply.
d. increase unemployment insurance.
B
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Capital gains are a type of income earned from
A) interest on savings accounts. B) employment in a factory. C) the sale of assets. D) all of the above.
A recent study showed that an increase in the price of gasoline promoted carpooling among office commuters. If gasoline is an important component in the fixed basket of goods used to calculate the Consumer Price Index, it will fail to reflect true changes in the cost of living of an average consumer because of the: a. quality bias
b. substitution bias. c. new good bias. d. quantity bias.
Because local banks earn fees for each loan, their role to:
A. create not many mortgages perfectly aligns with their incentives. B. properly assess the risk of each borrower is perfectly aligned with their incentive. C. properly assess the risk of each borrower is misaligned with their incentive. D. provide mortgage loans only to those with low credit scores is misaligned with their incentive.
Which of the following is a benefit of income inequality?
A. It promotes economic growth in the less developed economies. B. It motivates people to be at the high end of income distribution. C. It reduces the intensity of business fluctuations in an economy. D. It reduces the taxes to be paid by the ones in the low end of income distribution.