Which of the following government outlays would be classified as a transfer payment?
A) payments of veterans benefits under the GI bill
B) interest on the federal debt
C) subsidies to gold-mining firms
D) all of these
D
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If the quantity of money demanded is less than the quantity of money supplied, then the
A) interest rate will decrease. B) interest rate stays the same. C) interest rate will increase. D) effect on the interest rate is indeterminate.
If the marginal propensity to save (MPS) is 0.5 and net exports falls by $100 million, then
A) real Gross Domestic Product (GDP) will increase by $100 million. B) real Gross Domestic Product (GDP) will fall by $200 million. C) real Gross Domestic Product (GDP) will not change. D) the effect on real Gross Domestic Product (GDP) cannot be determined from the given information.
If the government wants a natural monopoly to earn a "fair return" or zero economic profit, it will set
a. price equal to marginal cost b. price equal to average total cost c. price equal to average revenue d. marginal cost equal to marginal revenue e. marginal cost equal to average total cost
A major problem with countries setting fixed exchange rates for their currencies is
A. The foreign exchange reserves of participating countries will always be depleted. B. Some participating countries are likely to experience continuing balance-of-payments deficits. C. The fixed rate will have to be maintained by currency market intervention. D. Import and export prices will probably become more unstable.