Central banks get the purchasing power to buy government securities by:
a. Increasing their liabilities in the form of deposits from banks.
b. Reducing currency in circulation.
c. Making discount loans to banks.
d. Taking loans from the government.
e. All of the above.
.A
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Provide a definition of the current account, the capital account, and the cash account. What is the relationship between the three accounts?
What will be an ideal response?
The rational-ignorance effect refers to the
a. lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election. b. fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters. c. lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them. d. problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues.
Expansion in the size of government relative to the market sector will eventually retard economic growth because
a. larger governments will be more involved in activities for which they are ill-suited. b. the higher taxes to finance a bigger government will lead to larger and larger deadweight losses from taxation. c. the incentive to engage in innovative activities and respond to change is weaker in government than in the market sector. d. all of the above are correct.
When an increase (decrease) in the price of one good causes a decrease (increase) in the demand for another good, the two goods are called ______.
a. complements b. detriments c. tributes d. substitutes