Which of the following correctly describes the federal budget?
a. The federal budget is a plan that describes Fed's monetary policy for the current financial year.
b. The federal budget is an aggregate profit and loss statement for all of the nation's business firms.
c. The federal budget is the sum of the spending plans of the 50 states.
d. The federal budget is a plan for federal government outlays and revenues for a specified period, usually a year.
d
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GDP may be computed using the expenditure or value-added approaches
Indicate whether the statement is true or false
When the Federal Reserve sells government bonds to the public, it:
a. increases the M1 money supply and increases the reserves of the commercial banking system. b. increases the M1 money supply, while reducing the reserves of the commercial banking system. c. reduces the M1 money supply, while increasing the reserves of the commercial banking system. d. reduces the M1 money supply and decreases the reserves of the commercial banking system.
When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because
a. the market price of the product will fall in response to the subsidy. b. the market price of the product will rise in response to the subsidy. c. the market price of the product will not change in response to the subsidy. d. buyers will reduce their demand for the product.
A lender expects to earn a real interest rate of 4.5% over the next 12 months. She charges a 9.25% (annual) nominal rate for a 12-month loan. What inflation rate is she expecting? If the lender is in a 30% marginal tax bracket, the borrower in a 25% marginal tax bracket, and they both have the same inflation expectations, what are the real after-tax rates each expects?
What will be an ideal response?