The Social Security Fund is designed as
A) a pay-as-you-go system.
B) an investment portfolio that individual contributors can make periodic payments into.
C) an account that allows periodic withdrawals by contributors.
D) an individual account with a federal reserve bank.
A
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If an increase of $10 million in excess reserves increases checkable deposits in the banking system by a maximum of $200 million, the required reserve ratio is: a. 0
b. 5 percent. c. 10 percent. d. 20 percent. e. 2 percent.
A $40 billion reduction in taxes increases Real GDP by $150 million. Assuming a constant price level, what does the tax multiplier equal?
A) 3.75 B) 3.00 C) 37.50 D) 0.27 E) ?0.73
A monopolist earns $50 million annually and will maintain that level of profit indefinitely, provided no other firm enters the market. If another firm successfully enters the market, the incumbent's profits remain at $50 million the first period, but fall to $25 million annually thereafter. The opportunity cost of funds is 10 percent, and profits in each period are realized at the beginning of each period. What is the present value of the firm's current and future earnings if entry occurs?
A. $250 million B. $400 million C. $300 million D. $500 million
When crowding out occurs, it ________ the effectiveness of ________ fiscal policy.
A. increases; expansionary B. reduces; contractionary C. reduces; expansionary D. increases; contractionary