A fiscal policy action to close a recessionary gap is to:
A. increase taxes.
B. increase the marginal propensity to consume.
C. decrease transfer payments.
D. increase government purchases.
Answer: D
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Suppose inter-city bus travel is a substitute for transportation by train. Which of the following could then be TRUE?
A) The cross elasticity between bus and train travel could equal 0.65. B) The cross elasticity between bus and train travel could equal 1.0. C) The cross elasticity between bus and train travel could equal 1.25. D) All of the above could be true.
By the height of the housing bubble in 2005 and early 2006, lenders had greatly loosened the standards for obtaining a mortgage loan, with many mortgages being granted to sub-prime borrowers ________ and "Alt-A" borrowers ________
A) with flawed credit histories; who did not document their incomes B) who borrowed money at rates below the prime interest rate; who had AAA credit ratings C) who purchased homes in depressed housing markets; who purchased homes which were repossessed by government agencies D) who borrowed more than 120 percent of the value of the house; with no proof of U.S. citizenship
If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods
a. True b. False
A higher discount rate generally decreases excess reserves
a. True b. False Indicate whether the statement is true or false