Expansionary monetary policy:
A. increases the interest rate and increases the price level.
B. decreases the interest rate and increases the price level.
C. increases the interest rate and decreases the price level.
D. decreases the interest rate and decreases the price level.
Answer: B
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Explain the principal-agent relationshi
What will be an ideal response?
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A) maintaining sufficient reserves to minimize the cost to the bank of deposit outflows B) extending loans to borrowers who will pay low interest rates, but who are poor credit risks C) acquiring funds at a relatively high cost, so that profitable lending opportunities can be realized D) maintaining high levels of capital and thus maximizing the returns to the owners
Assuming no change in the effective tax rate on capital, an increase in the government budget deficit will reduce the current account deficit if and only if the increase in the budget deficit
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