An example of nondiscretionary fiscal policy would be
A. an interest rate cut implemented to stimulate consumption.
B. a federal jobs program adopted to stimulate consumption.
C. a tax cut adopted to stimulate consumption.
D. the existence of the progressive federal income tax.
Answer: D
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Suppose the money multiplier in the United States is 3. Suppose further that if the Fed increases the discount rate by 1 percentage point, banks initially change their reserves by 400. To reduce the money supply by 4,200 the Fed should:
A. raise the discount rate by 10.5 percentage points. B. raise the discount rate by 3.5 percentage points. C. reduce the discount rate by 3.5 percentage points. D. reduce the discount rate by 10.5 percentage points.
Ceteris paribus, if buyers expect the price of airline tickets to fall in the future, then right now there should be
A. A decrease in the supply of airline tickets. B. No change in the supply of or demand for airline tickets because the price is not changing right now. C. A decrease in the demand for airline tickets. D. An increase in the demand for airline tickets.
A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.Refer to the above figures. An external benefit exists. This will lead to a(n)
A. underproduction equal to Q4 minus Q3. B. overproduction equal to Q4 minus Q3. C. underproduction equal to Q1 minus Q2. D. overproduction equal to Q1 minus Q2.
The ADS Business Conditions Index is a
A. leading index based on variables released with different frequencies. B. coincident index based on 85 monthly variables. C. coincident index based on variables released with different frequencies. D. leading index based on 85 monthly variables.