What is a market demand schedule?
a. a table showing how much of a product an individual will buy
b. a table showing how much of a product a market will buy
c. a graph showing how much of a product an individual will buy
d. a graph showing how much of a product a market will buy
Answer: b. a table showing how much of a product a market will buy
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The market prices of existing bonds are
A) inversely related to the interest rate. B) stated in terms of the interest rate. C) not related to the interest rate. D) directly related to the interest rate.
The same tools that were intended to allocate funds and spread risk more efficiently in the housing market made it:
A. easier to keep everyone fully informed. B. more difficult to keep everyone fully informed. C. easier to understand the true risk involved with these assets. D. more difficult to justify buying mortgage-backed securities over other low-risk assets.
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and GDP Price Index falls. b. The real risk-free interest rate falls, and GDP Price Index rises. c. The real risk-free interest rate rises, and GDP Price Index falls. d. There is not enough information to determine what happens to these two macroeconomic variables. e. The real risk-free interest rate and GDP Price Index remain the same.
Which of the following contributes to implementation lag for discretionary fiscal policy?
A) the time it takes to secure legislative approval for policy actions B) the time it takes for economic agents to respond to policy actions C) the difficulty of collecting economic data in a timely manner D) the time it takes to borrow funds to finance the fiscal policy