When the Fed sells government bonds to a bank, the initial effect on the bank is that its

Which of the following is most likely to cause interest rates to fall?

A) Government borrows to finance a war. B) All firms project higher future revenue streams for all of their projects. C) All firms project lower future revenue streams for all of their projects. D) Government institutes a high tax on savings.

Answer the following statements true (T) or false (F)

1. According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling. 2. Have a high fixed salary is what motivates entrepreneurs to make prudent decisions is dealing with business risk. 3. Government bailouts of failing businesses, like banks during the recent economic crisis, will tend to reduce the motivation among entrepreneurs to make prudent decisions is dealing with business risk. 4. College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms.