Suppose the GDP is in equilibrium at full employment and the MPC is .80. If government wants to increase its purchase of goods and services by $16 billion without changing equilibrium GDP, taxes should be:
A. Increased by $20 billion
B. Reduced by $16 billion
C. Increased by $16 billion
D. Reduced by $20 billion
A. Increased by $20 billion
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Which of the following is an example of a possessory property right?
a. The right to use a public park for morning walk. b. The right to park your car in your garage. c. The right to enjoy the fragrance of the flowers planted in your neighborhood. d. The right to travel in public transport.
The Federal Open Market Committee (FOMC) enters the market to purchase $10 million in securities. Suppose the Paris First National Bank decides to sell $10 million of the securities it owns to the FOMC; then
a. the Paris First National Bank now has $10 million more in excess reserves at the Fed b. the Paris First National Bank still has the $10 million government securities but they are held at the Fed c. this purchase and sale appears as a $20 million increase in the Fed's liabilities to Paris First National Bank d. the Fed has increased its asset position by $20 million, the bank's liabilities fall by $20 million e. there is no change to either the Fed or Paris First National Bank's balance sheet, there's just a trade-off of equal value
Government vouchers to purchase food, also known as food stamps, are an example of
a. an in-kind transfer. b. life-cycle income. c. a negative income tax. d. permanent income.
If the rate of inflation is 6 percent, the nominal interest rate is 9%, and the unemployment rate is 7%, how much is the misery index?
What will be an ideal response?