As disposable income decreases, consumption
A. decreases.
B. may either increase or decrease.
C. may either increase or decrease depending on the MPC.
D. increases.
Answer: A
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Sometimes during wars, government expenditures are larger than normal. To reduce the effects this spending creates on interest rates,
a. the Federal Reserve could increase the money supply by buying bonds. b. the Federal Reserve could increase the money supply by selling bonds. c. the Federal Reserve could decrease the money supply by buying bonds. d. the Federal Reserve could decrease the money supply by selling bonds.
Which of the following events is least likely to take place under a fixed exchange rate system?
A) an increased volume of trade because of a decline in exchange rate volatility B) increased cross-border capital flows C) increase in cost of trade because of higher transaction costs D) increased cross-border labor flows in integrated economies
An increased federal budget deficit resulting from a recession can actually help stabilize an economy through transfer payments because an increased budget deficit will ________ transfer payments and thereby ________ the income of some households.
A. increase; increase B. increase; decrease C. decrease; increase D. decrease; decrease
Standard loans of the International Monetary Fund, known as stand-by arrangements, are normally to be repaid in ten years.
Answer the following statement true (T) or false (F)