According to traditional Keynesian analysis, if the economy is in a recession, the government can move it back towards full employment by
a. cutting taxes and increasing expenditures. The effect of the tax cut is larger.
b. cutting taxes and increasing expenditures. The effect of the tax cut is smaller.
c. raising taxes and decreasing expenditures. The effect of the tax increase is larger.
d. raising taxes and decreasing expenditures. The effect of the tax increase is smaller.
b
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A major source of revenues for state and local governments is _____
a. income taxes b. payroll taxes c. intergovernmental revenues d. estate taxation
Which of the following is not one of the ways that banks reduce transaction costs for creditworthy borrowers?
a. coping with asymmetric information b. increasing risk through diversification c. enforcing loan contracts d. These are all ways banks reduce transaction costs