Intangible assets like stocks and bonds were created by U.S. industrial firms and traded elsewhere for capital funds. This activity eventually gave rise to investment banking
Indicate whether the statement is true or false
True
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The proposition that decreases in taxes that raise the government budget deficit has no effect on aggregate demand is called the
A) open-economy effect. B) federalism effect. C) Ricardian equivalence theorem. D) interest-rate effect.
Inflation can cause a misallocation of resources because
A. firms have to change their price labels at unusual times. B. the nominal rate of inflation doesn't equal the real rate of inflation. C. people are encouraged to borrow too much. D. inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices.
A resident of the U.S. just purchased a share of stock on the London stock market. As far as the U.S. balance of payments this purchase will
A. be entered in the financial account. B. be entered as a unilateral transfer in the current account. C. have no influence on the balance of payments since stock is not a good or service. D. require special drawing rights.
When there is an externality in a market
A) government intervention may increase economic efficiency. B) the government should use price controls to enable the market to reach equilibrium. C) the externality will move the market to an economically efficient equilibrium. D) the externality will cause the market price to be less than or greater than the equilibrium price.