Steven Landsburg has suggested that Scrooge, a character invented by Charles Dickens, was not really so bad. What could Landsburg be suggesting would happen in the market for loanable funds if all the misers of the world sold their assets and gave the money to the poor?
A. Demand would shift right, causing interest rates to rise.
B. Demand would shift left, causing investment to fall.
C. Supply would shift left, causing investment to fall.
D. Supply would shift right, causing interest rates to rise.
Answer: C
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Use the following graph to answer the next question.
Assume that the economy is in a rapid expansion with a price level of P2 and output level Q2. The government then adopts an appropriate discretionary fiscal policy. What will be the most likely new equilibrium price level and output?
A. P2 and Q4 B. P1 and Q3 C. P1 and Q1 D. P2 and Q2
A "flat tax" is another term for __________ tax
A) a progressive B) a proportional C) a regressive D) the inflation
Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?
A. Surpluses will develop B. Shortages will develop C. Underground markets will develop D. The equilibrium price will ration the good E. The quantity sold will increase
The primary tool of monetary policy is:
A. the discount rate. B. the reserve requirement. C. open market operations. D. the prime rate.