If government expenditures exceed tax receipts in a developing country, the government is most likely to:
A. increase taxes.
B. cut spending.
C. sell bonds to the central bank.
D. buy bonds from the central bank.
Answer: C
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A government's budget deficit is equal to
A) the change in the value of bonds issued plus the change in the money supply. B) the change in the value of bonds issued minus the change in the money supply. C) the change in the money supply minus the change in the value of bonds issued. D) either the change in the value of bonds issued or the change in the money supply.
Examples of transfer payments are
A) wages, profits, and rents. B) Social Security checks and unemployment insurance payments. C) salaries of educators, police, and firefighters. D) federal government spending for national defense.
Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:
A. some firms will exit this market and the price will return to P0. B. new firms will enter this market and the price will remain at P1. C. new firms will enter this market and the price will return to P0. D. some firms will exit this market and the price will remain at P1.
The Federal Reserve's main source of income is
a. fees charged to banks. b. funds budgeted by Congress. c. fees charged to the public every time they use an ATM. d. income from interest on the government securities it owns.