Consider an economic model designed to analyze the purchasing decisions of households. An assumption that a household chooses between only two goods would be an example of a
a. simplifying assumption
b. critical assumption
c. macroeconomic assumption
d. financial assumption
e. positive assumption
A
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At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In so doing, they are
A) discouraging commercial banks from borrowing from the Fed. B) encouraging commercial banks to borrow from each other. C) doing both A and B. D) doing none of the above.
A rise in the budget deficit
a. shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange right. b. shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange left. c. shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange right. d. shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange left.
The strong appreciation of the dollar for the last part of the 1990s:
A. played a key role in keeping inflation in check even though the economy was growing rapidly. B. was a benefit to all U.S. residents but costly to most foreign producers. C. was a benefit to U.S. exporters, but put a severe strain on U.S. Importers. D. was welcomed by all U.S. manufacturers.
Expansionary fiscal policy tends to:
A. reduce both U.S. interest rates and U.S. capital inflows. B. increase U.S. interest rates but reduce U.S. capital inflows. C. reduce U.S. interest rates but increase U.S. capital inflows. D. increase both U.S. interest rates and U.S. capital inflows.