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Multiple choice problems about Ricardo-Barro effect, Bond Prices and Demand for money.

1. A discretionary fiscal policy is a fiscal policy that:

a) involves a change in government defense spending.

b) is triggered by the state of the economy.

c) requires action by the Congress.

d) involves a change in corporate tax rates.

2. In the absence of a Ricardo-Barro effect, a fiscal policy that decreases government saving ________ the supply of loanable funds, ________ the real interest rate, and ________ investment.

a) increases; decreases; crowds out

b) increases; decreases; increases

c) decreases; increases; increases

d) decreases; increases; crowds out

3. In the short-run, among which of the following actions increase the interest rate?

a) A decrease in the demand for money

b) An increase in bond prices

c) An increase in the quantity of money

d) An increase in the demand for money

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M919473

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