According to the Keynesian model, the optimal fiscal policy is to
a. increase cyclical but not structural deficits during a recession.
b. reduce cyclical and structural deficits during a recession.
c. increase structural deficits during an recession.
d. maintain a balanced budget in case of national emergency.
A
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Assume we have a simplified banking system in balance-sheet equilibrium. Also assume that all banks are subject to a uniform 10 percent reserve requirement and demand deposits are the only form of money. A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of:
a. $90. b. $1,000. c. $100. d. $10.
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the question(s) that follow.
Figure 2.2Refer to Figure 2.2. If Microland's economy is at Point B, it could produce more consumer goods
A. without sacrificing any capital goods. B. only with additional resources. C. only with technological improvements. D. by sacrificing some capital goods.
If the United States has a net export surplus, which of the following must be true?
A) Domestic private saving must be greater than net foreign investment. B) Net foreign investment must be positive as well. C) Domestic public saving must be greater than net foreign investment. D) The balance on the financial account must equal the balance on the current account.
Full loss offset allows individuals to
A. claim children as dependents. B. deduct mortgage interest from taxes. C. deduct savings interest from taxes. D. deduct capital losses from taxable income.