You hear that the price of gasoline will fall 20 cents overnight. This will tend to
A) increase your demand today.
B) decrease your demand tomorrow.
C) increase your demand tomorrow.
D) leave your demand unchanged both today and tomorrow, especially if it is highly elastic to changes in prices.
C
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For the past 40 years the Federal Reserve has expressed policy in terms of a target value for:
A. open market operations. B. bank reserves. C. the Federal Reserve discount rate. D. the federal funds rate.
An important reason why Ricardian equivalence may fail is if
A) borrowing and lending are done through intermediaries. B) government debt incurred today may not be paid off until after some current consumers are deceased. C) state and local governments also engage in debt finance. D) some consumers are borrowers, while other consumers are lenders.
When the money supply increases by $5 billion, tax revenues are $10 billion, and government borrowing is $30 billion, government spending must equal:
a. $10 billion. b. $15 billion. c. $20 billion. d. $35 billion. e. $45 billion.
Transfer payments are
a. included in GDP because they represent income to individuals. b. included in GDP because they eventually will be spent on consumption. c. not included in GDP because they are not payments for currently produced goods or services. d. not included in GDP because taxes will have to be raised to pay for them.