The government is pursuing an expansionary policy if it:
a. decreases its spending and increases its tax revenues.
b. increases its spending or increases its tax revenues.
c. decreases its spending or reduces its tax revenues.
d. increases its spending and/or reduces its tax revenues.
d
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Holding large amounts of bank capital helps prevent bank failures because
A) it means that the bank has a higher income. B) it makes loans easier to sell. C) it can be used to absorb the losses resulting from bad loans. D) it makes it easier to call in loans.
When choosing between fair price and marginal cost regulation for a natural monopoly, regulators must choose between
a. c and d b. c and e c. two different price and quantity combinations d. efficiency and equity e. possible cost drift and subsidization
The term crowding-out effect refers to
a. the reduction in aggregate supply that results when a monetary expansion causes the interest rate to decrease. b. the reduction in aggregate demand that results when a monetary expansion causes the interest rate to decrease. c. the reduction in aggregate demand that results when a fiscal expansion causes the interest rate to increase. d. the reduction in aggregate demand that results when a decrease in government spending or an increase in taxes causes the interest rate to increase.
An increase in which of the following variables will cause a reduction in the demand for domestic goods?
A) foreign income B) the real exchange rate C) consumer confidence D) domestic income E) all of the above