Which of the following does not usually occur when there is an increase in government spending?
a. Government purchases crowd out private-sector spending.
b. Total spending decreases.
c. The interest rate increases.
d. Investment spending declines.
e. Household saving increases.
B
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If the real interest rate is below equilibrium, which of the following is likely to occur? a. Lenders will raise their interest rates which will encourage saving
b. Lenders will raise their interest rates which will encourage borrowing. c. Lenders will lower their interest rates which will encourage saving. d. Lenders will lower their interest rates which will encourage borrowing.
A tariff
A. legally specifies maximum import or export ceilings. B. increases allocative efficiency. C. is a special tax applied only to internationally traded goods. D. lowers the prices of imported goods.
Your financial investments consist of U.S. government bonds maturing in twenty years and shares in a start-up internet company. If interest rates on newly-issued government bonds increase, then the price of your bonds will ________ and the price of the shares you own will ________.
A. increase; increase B. decrease; decrease C. decrease; not change D. increase; not change
One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.