If the net public debt declined last year, then which of the following most likely occurred during that year?
A. The share of foreign holdings of the government's debt increased.
B. The government experienced a budget surplus.
C. The government's budget was balanced.
D. The government experienced a budget deficit.
Answer: B
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From 1970 to 2006, average real income for the top 5% of U.S. households
A) decreased by more than 10%. B) remained virtually unchanged. C) increased by about 5%. D) almost doubled.
To reduce moral hazard problems, banks include restrictive covenants in loan contracts. In order for these restrictive covenants to be effective, banks must also
A) monitor and enforce them. B) be willing to rewrite the contract if the borrower cannot comply with the restrictions. C) trust the borrower to do the right thing. D) be prepared to extend the deadline when the borrower needs more time to comply.
When borrower-spenders raise funds in financial markets, they issue new securities in the
A) primary market. B) secondary market. C) third market. D) fourth market.
The result that perfectly competitive firms produce at the lowest per-unit cost is derived from the assumptions of
A. homogeneous products. B. few sellers. C. firms facing horizontal demand curves. D. free entry and exit.