Fiscal policy:
a. Is a powerful tool because budget deficits add directly to Aggregate Demand with no offsetting changes in consumption, investment, and/or net exports.
b. May not be a powerful tool if most government expenditures are fixed and unchangeable in the short run.
c. Is not a powerful tool because the government has very little control over a nation's monetary base and/or money multiplier.
d. Is a powerful tool because of the decisive movements in the automatic stabilizers.
.B
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The assertion that income accrues to people as a consequence of interactions among suppliers and demanders
A) amounts to an endorsement of the existing system. B) amounts to an endorsement of the pattern of income distribution. C) ignores the fact that the interactions are often unfair. D) offers a way of approaching the issue of income distribution.
If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to ________
A) $64 billion B) 8 C) $8 billion D) 1/8
The main policy-making body of the Federal Reserve System is the Federal Open Market committee
Indicate whether the statement is true or false
If the United States has a net export surplus, which of the following must be true?
A) Domestic private saving must be greater than net foreign investment. B) Net foreign investment must be positive as well. C) Domestic public saving must be greater than net foreign investment. D) The balance on the financial account must equal the balance on the current account.