An annually balanced federal budget
A. enables fiscal policy to be implemented in a timely and selective manner, without the drag on consumption and saving that is usually associated with federal borrowing.
B. essentially eliminates the use of fiscal policy for stabilizing the economy.
C. could bring the economy up to full employment if a deflationary GDP gap exists.
D. would reduce tax collections, thereby stimulating aggregate demand.
B. essentially eliminates the use of fiscal policy for stabilizing the economy.
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Keynes's liquidity preference theory indicates that the demand for money is ________ related to ________
A) negatively; interest rates B) positively; interest rates C) negatively; income D) negatively; wealth
Banks are better at solving the stockholder-lender conflict than rating agencies when they
A) are allowed to hold a substantial ownership stake in the borrowing firm. B) steer clear of holding any ownership stake in the borrowing firm. C) operate in markets-oriented financial systems. D) issue individually-approved loans rather than lines of credit.