By definition, government purchases and taxes are zero for a closed economy
a. True
b. False
Indicate whether the statement is true or false
False
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Governments run a balanced budget when
A) their debt is interest-free. B) transfer payments equal zero. C) revenues equal spending. D) revenues exceed spending.
According to proponents of the interest-rate-based monetary policy transmission mechanism, any increase in the money supply
A) causes velocity to increase, and so in the short run nominal Gross Domestic Product (GDP) must increase. B) will increase Gross Domestic Product (GDP) only if interest rates fall and investment is sensitive to decreasing interest rates. C) is effective in increasing Gross Domestic Product (GDP) only if it causes an outward shift of the aggregate supply curve. D) will move the economy from the "liquidity trap" during times of recession if interest rates fall enough to stimulate private investment.
Suppose the Chinese government regulates the price of food and forbids firms from setting a higher price. In this case the government is setting a
A) price floor. B) price ceiling. C) quota. D) tax.
The Treasury also implements monetary policy
Indicate whether the statement is true or false