Total federal government spending in 2007 was
a. less than $100 billion
b. between $125 billion and $250 billion
c. $750 billion
d. over $2.8 trillion
e. over $12.5 trillion
D
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Rapid growth in M2 is likely to lead to ________
A) low demand for labor B) high levels of inflation C) low levels of investment D) high real interest rates
In the Keynesian transmission mechanism, if investment is completely interest-insensitive, then an increase in the money supply will
A) cause total expenditures and aggregate demand to increase. B) cause total expenditures and aggregate demand to decrease. C) have no impact on total expenditures and aggregate demand. D) cause total expenditures to increase and aggregate demand to decrease. E) cause total expenditures to decrease and aggregate demand to increase.
Foreign aid:
A. provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries. B. is an important source of funding for investment in most developing countries. C. does not contribute much to domestic investment in most developing countries. D. is largely wasted in most developing countries because it comes with no strings attached.
A country with a fixed exchange rate experiences upward pressure on the exchange rate value of its currency. The central bank chooses to intervene in the market to maintain its fixed exchange rate. How would the central bank go about intervening? If the upward pressure on the currency persists, would it be difficult to maintain the fixed exchange rate? Why or why not? Would your answers differ if the country carried out sterilized intervention? Why or why not? Give an example of a country that attempted to maintain its exchange rate in the face of upward pressure on its currency value. What was the result?
What will be an ideal response?