Reducing the budget deficit by cutting government spending could conceivably:
A. increase income if interest rates rise enough and government spending is more productive than private investment.
B. increase income if interest rates fall enough and private investment is more productive than government spending.
C. decrease income if interest rates rise enough and private investment is more productive than government investment.
D. decrease income if interest rates fall too much and private investment is more productive than government investment.
Answer: B
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The Fisher effect ________
A) comes from combining the Fisher equation and the classical dichotomy B) predicts that in the long run nominal rates will rise with increases in expected inflation C) shows that in high inflation we typically see high nominal interest rates D) all of the above E) none of the above
When the ownership of the different stages of production of a commodity lies with different individuals, it becomes difficult to take decisions on capacity expansion because of all the following reasons, EXCEPT:
a. differences in attitudes toward risk. b. differences in motivation. c. different degrees of risk exposure. d. different abilities to hedge themselves.
Virtual Currency Unit 3 (VCU3) is poses a __________ risk to nations in which is it used because ___________________________
a. Low; it conversion back into real world currencies causes no change in M2, the monetary base, or net demand for real goods and services. b. Low; it cannot be converted back into real world (legal tender) currencies. c. High; it can be converted and spent on real-world goods and services. d. High; online companies can create as much as they want, which could overinflate a nation's money supply and excessively increase demand.
There are two universities, A and B, in a city. Tuition rises at University A and, as a result, the demand for attending University B rises. It follows that educational services at the two universities are
A) complements. B) normal goods. C) inferior goods. D) substitutes. E) none of the above