Usury laws:
A. allocate funds from low-productivity to high-productivity investments.
B. establish a legal ceiling on interest rates.
C. make more funds available to low-income borrowers.
D. create a surplus of loanable funds.
Answer: B
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Which of the following is NOT included in the flow of investment spending that is part of total planned expenditures in the economy?
A) purchases of corporate stock B) inventory investment C) fixed investment D) spending on capital goods
For each of the following situations, choose a fiscal policy and explain how it could be used to correct the economic problem
a. Real GDP is below potential GDP following a financial market crisis. b. A positive demand shock increases aggregate expenditure beyond the full employment level and leads to fears of rising inflation. c. The economy is in a recession due to rising defaults on mortgages following the bursting of a housing bubble.
The foreign exchange rate is the
a. current account b. the law of comparative advantage c. the capital account d. the balance of trade e. the price of one currency in terms of another
In the determination of disposable income, transfer payments are treated as if they
a. are the same as taxes. b. did not exist. c. are the opposite of taxes. d. were a constant amount.