Refer to Figure 1.7. Which of the following points are unattainable, ceteris paribus?
A. G.
B. F.
C. E.
D. N.
Answer: D
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The large number of bank failures in the 1980s compared to the number of failures in earlier decades appears to be evidence __________ the existence of __________ problem in deposit insurance
A) supporting; a moral hazard B) supporting; an adverse selection C) against; a moral hazard D) against; an adverse selection
A Pareto improvement is
a. an action in which the gains to the gainers outweigh the losses to the losers b. any action that does not harm a third party c. an action that makes at least one person better off, and no one worse off d. any action that involves a side payment to a third party e. the typical outcome of government action
Some nations use a currency board to manage their currencies. How does this work?
a. It is all in the hands of international banks. b. The International Monetary Fund manages the currency. c. There is a fixed rate regime with a set of strict rules and policy guidelines to keep the currency's value stable. d. The currency is allowed to float, but its fluctuations are reviewed periodically by a board of economists.
Answer the following questions true (T) or false (F)
1. Prior to the 1930s, the majority of dollars spent by government was spent at the state and local levels. 2. Expansionary fiscal policy involves increasing government purchases or increasing taxes. 3. Contractionary fiscal policy is used to decrease aggregate demand in an attempt to fight rising inflation.