Holding other factors constant, if a tax increase moves the government budget from deficit to surplus, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. decrease; decrease
B. increase; increase
C. decrease; increase
D. increase; not change
Answer: C
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The largest spending category for state governments is
A) welfare. B) health care. C) education. D) highway construction.
A consumer's demand curve
a. shows the quantity of a good or service that individual will demand at each different price b. shows the quantity of a good or service that individual will demand at different levels of income c. is derived by equating the income and substitution effects d. slopes downward because the income effect offsets the substitution effect e. will be vertical if the income effect outweighs the substitution effect
When households practice diversification it means that they are buying which of the following?
a. stocks or bonds from only one company to increase their risks b. stocks or bonds from only one company to lower their risks c. stocks and bonds from a wide-range of companies to increase their risks d. stocks and bonds from a wide-range of companies to lower their risks
The monetarists believed that
A. the way to fight recessions was by means of fiscal policy. B. the quantity theory of money has a great deal of validity. C. recessions generally come about because the Federal Reserve is not allowing the money supply to grow fast enough. D. the money supply should be allowed to grow at least 8 percent a year.