A tariff is a tax on imports.
Answer the following statement true (T) or false (F)
True
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An increase in the money supply:
a. raises the interest rate, causing an increase in investment and an increase in GDP. b. lowers the interest rate, causing an increase in investment and an increase in GDP. c. raises the interest rate, causing a decrease in investment and an increase in GDP. d. lowers the interest rate, causing a decrease in investment and an increase in GDP. e. lowers the interest rate, causing a decrease in investment and a decrease in GDP.
Local banks could pass the risk involved in holding mortgage debts on to an investor with a higher risk tolerance using:
A. mortgage-backed securities. B. leveraged securities. C. leveraged investments. D. government-backed securities.
For a country to successfully maintain a fixed exchange rate value of its currency relative to another currency (for example, as is done when currencies are unified or pegged), it must
a. maintain a relatively high rate of inflation. b. balance the government budget each year. c. give up the independence of its monetary policy. d. run a trade deficit.
The direct effect of an increase in the money supply is
A) people will spend the extra money, causing the aggregate demand curve to shift to the right and prices to rise, and causing the economy to go into recession. B) people will save the money, causing an increase in bank deposits, causing interest rates to fall, and loans to expand. C) people will save more money, causing a decrease in economic activity and a fall in prices. D) people will spend the extra money, causing the aggregate demand curve to shift to the right, creating an increase in economic activity.