In countries such as El Salvador or Ghana, tax revenue is extremely limited due to the lack of an adequate tax-collection agency. These countries most likely will issue bonds and sell them to the central bank in order to cover government expenditures. Thus, the lack of:
A. well-developed bond markets may lead these economies to inflation and poor economic performance.
B. a banking system may lead these economies to inflation and poor economic performance.
C. government intervention may lead these economies to inflation and poor economic performance.
D. property rights and laws may lead these economies to inflation and poor economic performance.
Answer: A
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The GDP deflator is a broader measure of the price level than the CPI because
A) it covers sales tax. B) it covers rents. C) it covers investment. D) it factors out fluctuations in seasonal items.
If a bank has total reserves of $40,000 and a 20 percent reserve requirement, then the maximum amount of demand deposits the bank can have if excess reserves are zero is
a. $100,000 b. $80,000 c. $300,000 d. $20,000 e. $200,000
An increase in the U.S. price level (foreign prices held constant) will cause a leftward shift in the aggregate demand curve
a. True b. False Indicate whether the statement is true or false
Measuring poverty using an absolute income scale like the poverty line can be misleading because
a. income measures do not include the value of in-kind transfers. b. money is valued less highly by the poor than by the rich. c. the poor are not likely to participate in the labor market. d. income measures are adjusted for the effects of labor-market discrimination.