If the Federal Reserve wished to engage in expansionary monetary policy, it could
A. raise the reserve ratio.
B. raise the Federal Funds rate target.
C. sell government debt.
D. lower the primary credit rate.
Answer: D
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According to empirical evidence
A) providing international aid to developing nations stimulates economic growth. B) providing international aid to developing nations does not have a positive effect on economic growth. C) international trade stimulates economic growth in richer nations, but actually slows economic growth in developing economies. D) international trade stimulates economic growth in developing economies, but actually slows economic growth in richer nations.
If people leave bequests primarily because they are uncertain about the timing of their deaths,
A) the marginal propensity to consume out of a temporary change in income would tend to be higher than in the simple version of the LCH. B) unrealized capital gains from higher housing prices will probably lead to a higher consumption-to-income ratio than in the simple version of the LCH. C) increases in wealth from the stock market would be consumed over a longer time horizon than in the simple version of the LCH. D) A and C are both correct.
Most of the U.S. national debt is owed to ____. Thus a rising national debt implies that there will be a future redistribution of income and wealth in favor of ____
a. foreigners; foreigners b. other U.S. citizens; bondholders c. foreigners; those needing government services d. other U.S. citizens; those needing government services
Public choice theory predicts that
a) voters are rationally ignorant b) voters are fully informed about the effects of policies c) governments make choices that achieve an efficient provision of public goods d) votes are based on reality, not perceptions