The income and expenditure approaches to calculating GDP will produce the same result because for every dollars worth of output that is produced a dollars worth of income will be generated as income for the owners of the factors of production used to produce the output
a. True
b. False
A
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Special-interest programs are highly attractive to vote-seeking politicians because
a. these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. b. members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. c. low-income recipients are the primary beneficiaries of special-interest programs. d. members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.
A celebrity endorsement for a product that provides no information for the good is useless to consumers.
Indicate whether the statement is true or false.
Using your knowledge gained from this chapter, briefly explain why government “pork” is created, even when the government spending appears ridiculous
Please provide the best answer for the statement.
Before the dramatic increase in interest rates, savings and loans were paying a regulated rate on their liabilities (deposits) and earning a higher rate on their assets (mortgages). They had a positive interest rate spread which also gave them a positive net interest margin. Since they were quite confident concerning the cost of funds, they could set mortgage rates that would ensure an adequate spread and margin. Once interest rates began to increase and the rate ceiling on deposits was removed, the interest rate offered to depositors (cost of funds) increased, but because most of the assets of savings and loans were in long-term mortgages, the interest earned on assets was fairly interest rate insensitive.
This quickly put many savings and loans into negative spread and margin positions and contributed to the crisis that was to hit this industry. Indicate whether the statement is true or false.