Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________
A) increase; increase; surplus B) fall; increase; deficit
C) increase; fall; surplus D) fall; fall; deficit
B
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Holdings of partially finished components involve inventories of ________
A) Tobin's q B) work in process C) production smoothing D) stock-out components
Deflating a nominal quantity is the process of dividing a ________ quantity by a ________ in order to express the quantity in ________ terms.
A. real; nominal quantity; real B. nominal; price index; real C. real; price index; nominal D. nominal; real quantity; nominal
If the government increases taxes by $4 billion and increases spending by $4 billion, equilibrium output increases by $4 billion.
Answer the following statement true (T) or false (F)
Governments have often intervened in financial markets because they believed that
a. interest rates were too low b. competition among banks leads to poor services c. bank lending was favoring lucrative projects at the expense of crucial development needs d. too much foreign money was entering their financial systems e. all of the above