If government spending and tax collections both increase by the same amount, then according to the classical loanable funds market:
a. the demand for loanable funds will increase and the interest rate will rise.
b. the demand for loanable funds will fall and the interest rate will rise.
c. savings will rise and interest rates will fall.
d. nothing will shift and the interest rate will remain constant.
e. none of the above.
B
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Comment on the following statement. "Taxing externality-producing activities may not eliminate damages."
What will be an ideal response?
Reserves are defined as
a. the total cash in bank vaults b. money deposited in Federal Reserve accounts c. the sum of vault cash and deposits at Federal Reserve banks d. the total amount of money a bank must hold e. ten percent of demand deposit liabilities
A monopsony will:
A. hire more workers than a competitive employer. B. pay a higher wage than a competitive employer. C. employ a quantity of labor where the marginal revenue product equals the marginal factor cost. D. have a marginal factor cost curve equal to the labor supply curve.
Refer to the Economics in Practice on page 360. Advertisements provide information in two ways-what they say and what they omit.
Answer the following statement true (T) or false (F)