Mainstream macroeconomics would suggest that fiscal policy:
A. Affects GDP and the price level through changes in aggregate supply
B. Changes aggregate demand and GDP through the multiplier process
C. Has no effect unless the fiscal policy is accompanied by changes in the money supply
D. Is relatively ineffective because the outcomes are anticipated and offset
B. Changes aggregate demand and GDP through the multiplier process
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If buyers cannot distinguish between "lemons" and "cherries" in the used car market but sellers can, the price buyers are willing to pay for used cars will be:
A. high enough to guarantee that at least 50 percent of the used cars offered for sale are "cherries." B. equal to zero since no one will take the chance of purchasing a "lemon" even if the value of a car known to be a lemon is greater than zero. C. so low that sellers with "cherries" will be unwilling to sell. D. so low that sellers with "lemons" will be unwilling to sell.
The difficulty of ascertaining the right second-best trade policy to follow
A) reinforces support for the third-best policy approach. B) reinforces support for increasing research capabilities of government agencies. C) reinforces support for abandoning trade policy as an option. D) reinforces support for free-trade options. E) reinforced support for the domestic market failure argument.
If the U.S. government sells bonds to fund improvements in infrastructure, and the bonds are bought by foreigners, the burden on future U.S. taxpayers
A) is not increased so long as the return on the improvements is at or above the borrowing cost. B) is not increased so long as the return on the improvements is below the borrowing cost. C) is not increased so long as the return on the improvements is above zero. D) is increased regardless of the borrowing cost and the return on the improvements.
The holder of a corporate bond
a. receives a guaranteed dividend payment each year b. can vote at shareholder meetings c. can vote only for the board of directors at shareholder meetings d. is a part owner of the business e. receives, at most, a stated interest payment on the investment