If Congress instituted an investment tax credit
a. it would make buying bonds more desirable, so the demand for loanable funds would shift.
b. it would make buying capital goods more desirable, so the demand for loanable funds would shift.
c. it would make buying bonds more desirable, so the supply of loanable funds would shift.
d. it would make buying capital goods more desirable, so the supply of loanable funds would shift.
b
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Assuming that MPC is .75, equal increases in government spending and tax collections by $10 billion will
A. increase the equilibrium real GDP by $10 billion. B. reduce the equilibrium real GDP by $10 billion. C. increase the equilibrium real GDP by $2.5 billion. D. leave the equilibrium real GDP unchanged.
For a good such as food, the income elasticity is likely
A) negative. B) equal to zero. C) positive and less than one. D) positive and greater than one. E) undefined because people always buy the same amount of food.
The most efficient way to encourage the growth of an infant industry is through
A) a voluntary export restraint. B) a tariff. C) a subsidy. D) an import quota.
The demand for U.S. dollars represents:
A) the demand for U.S. goods and financial assets by households and firms outside the United States. B) the demand for foreign goods and financial assets by households and firms within the United States. C) the demand for U.S. goods and financial assets by households and firms within the United States. D) the willingness of households and firms that own dollars to exchange them for foreign currency.