The ultimate source of liquidity in a modern industrial economy is the
A) government Treasury.
B) central bank.
C) capital market.
D) liquidity market.
B
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On a diagram of the consumption function and the 45-degree line, saving at each level of disposable income is the vertical distance
A) from the horizontal axis to the intersection point of the consumption line and the 45-degree line. B) from the horizontal axis to the 45-degree line. C) between the consumption and the 45-degree lines. D) from the horizontal axis to where the consumption line intersects the vertical axis.
Assuming the Fisher Effect holds, and given U.S. tax laws, an increase in inflation
a. increases the real interest rate and the after-tax real rate of interest. b. increases the real interest rate and the after-tax real rate of interest. c. does not change the real interest rate but raises the after tax real rate of interest. d. does not change the real interest rate but reduces the after-tax real rate of interest.
An increase in government spending financed by borrowing changes people's expectations about future taxation such that current consumption expenditures
a. fall. The increase in expenditures makes it likely that future taxes will create smaller distortions. b. fall. The increase in expenditures makes it likely that future taxes will create larger distortions. c. rise. The increase in expenditures makes it likely that future taxes will create smaller distortions. d. rise. The increase in expenditures makes it likely that future taxes will create larger distortions.
In a monopolistically competitive industry in long-run equilibrium
A. price equals marginal cost for each firm. B. each firm is making a normal profit. C. each firm is producing the output at which long-run average cost is at its minimum point. D. all of the above E. none of the above