If the government chooses to finance its debt interest obligations by issuing bonds that are purchased by the Federal Reserve,
a. the money supply will remain the same because the Fed pays for the bonds by creating an equivalent deposit at the Treasury
b. external debt will be decreased dramatically
c. overconsumption will be halted
d. the money supply will decrease, causing deflation
e. the money supply will increase, causing inflation
E
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In new growth theory, growth in real GDP per person occurs because
i. human capital grows indefinitely. ii. technology advances as a result of choices individuals make. iii. profit incentives encourage technological change. A) i only B) ii only C) iii only D) both i and iii E) i, ii, and iii
The magnitude of the slope of the indifference curve between steak and lobster is called the marginal rate of substitution
Indicate whether the statement is true or false
When decisions are made by majority rule, elected officials have a strong incentive to
A) keep taxes low, run budget surpluses, and spend taxpayer funds wisely. B) protect individual rights and avoid favoritism of some individuals and voting blocs relative to others. C) take resources from taxpayers and use them to provide favors for various voting blocs in exchange for contributions and other forms of political support. D) serve the interest of consumers and taxpayers, and undertake only projects that are efficient.
Foreign aid:
A. provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries. B. is an important source of funding for investment in most developing countries. C. does not contribute much to domestic investment in most developing countries. D. is largely wasted in most developing countries because it comes with no strings attached.