Assume that the economy is in a recession and there is a budget deficit. A strict balanced-budget rule that would require the Federal government to balance its budget during a recession would be:
A. Expansionary and worsen the effects of the recession
B. Contractionary and worsen the effects of the recession
C. Contractionary and counter the effects of the recession
D. Expansionary and counter the effects of the recession
B. Contractionary and worsen the effects of the recession
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When money is used to compare the relative price of a burrito and a taco, money is being used as a
A) medium of exchange. B) store of value. C) measurement of inflation. D) unit of account. E) token of bartering.
The Fed's countercyclical policy tools to eliminate a recession include lowering:
a. the required reserve ratio, cutting the discount rate, and selling government bonds on the open market. b. the required reserve ratio, raising the discount rate, and selling government bonds on the open market. c. the required reserve ratio, raising the discount rate, and buying government bonds on the open market. d. the discount rate, cutting the discount rate, and raising the margin requirement. e. the reserve requirement, lowering the discount rate, and buying government bonds on the open market.
If inflation was zero percent, nominal interest rates would be:
A. larger than real interest. B. equal to real interest rate. C. at the optimal rate. D. smaller than real interest.
Changes in the value of stocks may play a big role in the consumption decisions of individuals. How would changes in the stock market affect the consumption function?