Balancing the federal budget over the business cycle requires
A. deficits incurred during economic slumps that are offset by surpluses during economic booms.
B. raising taxes and cutting spending during stagflation.
C. rapid increases in the national debt during national emergencies.
D. matching deficits and surpluses each time Earth orbits the sun.
E. that the national debt grow only as fast as GDP grows.
A. deficits incurred during economic slumps that are offset by surpluses during economic booms.
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An increase in the demand for Treasury bills will
A) eventually cause households to hold less money. B) decrease the price of Treasury bills. C) increase the opportunity cost of holding money vs. Treasury bills. D) decrease the interest rate on Treasury bills.
Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP?
A) There is a $20 billion decrease in equilibrium GDP. B) There is a $15 billion decrease in equilibrium GDP. C) There is a $15 billion increase in equilibrium GDP. D) There is a $20 billion increase in equilibrium GDP.
One reason a bank keeps vault cash is because it
a. may be required to provide cash to customers who are withdrawing their funds b. wants to earn more interest income c. wants to offer more loans d. may need to make transactions with other banks e. may need to pay more interest on its savings accounts
Which of the following is correct?
a. A horizontal line has an infinite slope, and a vertical line has a zero slope. b. A horizontal line has a slope of 1, and a vertical line has a slope of -1. c. A horizontal line has a zero slope, and a vertical line has an infinite slope. d. A horizontal line has a slope of -1, and a vertical line has a slope of 1.