The aggregate demand curve will shift to the right ________ the initial decrease in taxes
A) by less than
B) by more than
C) by the same amount as
D) sometimes by more than and other times by less than
Answer: B
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The key assumption of the liquidity premium theory is that investors
A) view bonds of different maturities as perfect substitutes. B) view bonds of different maturities as completely unsubstitutable. C) always choose the bond with the highest expected return, regardless of maturity. D) care about both expected returns and time to maturity.
A prisoner's dilemma problem can be solved by _____
a. the parties are kept from communicating with each other. b. a third party enforced their cooperation c. the parties were not guilty of the crime d. giving the parties sufficient time to arrive at the social beneficial decision
Which of the following will tend to decrease the excess reserves of the commercial banking system? a. The central bank buys bonds from the public
b. The central bank sells bonds to a commercial bank. c. The central bank reduces its discount rate. d. The central bank decreases the required reserve ratio.
One reason why purchasing power parity may not work perfectly is that transportation costs reduce trading possibilities
a. True b. False