The crowding-out effect stresses that
a. an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions.
b. an increase in taxes will restrain aggregate demand and, thereby, help to control inflation.
c. additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.
d. a budget deficit is a highly effective tool with which to combat recessions.
e. both a and d are correct.
C
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Reserves are equal to the sum of
A) required reserves and excess reserves. B) required reserves and vault cash reserves. C) excess reserves and vault cash reserves. D) vault cash reserves and total reserves.
U.S. data suggest that the U.S. economy is located where on the Laffer curve?
A) On the right side, after the peak in tax revenue. B) On the left side, before the peak in tax revenue. C) At the peak in tax revenue. D) The economy was on the right side before the 1980s and on the left side after 1980.
Price floors are only effective below the market equilibrium
a. True b. False Indicate whether the statement is true or false
To finance a federal budget deficit, the U.S. Treasury borrows by selling:
a. Treasury bills. b. Treasury notes. c. Treasury bonds. d. All of the answers are correct.