Because contractionary fiscal policy raises domestic interest rates, it can be used to fix the value of the domestic currency above the market equilibrium rate.
Answer the following statement true (T) or false (F)
False
Contractionary fiscal policy lowers interest rates by reducing the extent of government borrowing.
You might also like to view...
Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 20% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money will, in reality, most likely
A) increase the money supply by more than $1,000. B) increase the money supply by less than $1,000. C) increase the money supply by exactly $1,000. D) increase the money supply by exactly $5,000.
Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.25 per minute and the largest fixed fee that it can, what is Always There's profit per customer?
A. $153.13 B. $196.88 C. $200 D. $175
Assuming elasticity of demand is reported as an absolute value, a price elasticity of demand of 0.4 indicates an:
A. elastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price. B. inelastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price. C. elastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price. D. inelastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price.
Which of the following "externalities" does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area that raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thus raising costs of other firms. IV. An individual's unwillingness
to obtain job training, thereby lowering the total GNP. a. I, III, and IV. b. III and IV. c. III only. d. IV only.