Suppose that government purchases of goods and services increase by $200 and at the same time lump-sum taxes increase by $200 . Which of the following is true in this case?
a. Whether the budget deficit will increase or decrease will depend on the value of the marginal propensity to consume.
b. The budget deficit will increase by $200
c. The budget deficit will increase by $400.
d. The budget deficit will decrease as the economy expands.
e. There will be no change in the budget deficit.
d
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If a bank needs to raise the amount of capital relative to assets, a bank manager might choose to
A) buy back bank stock. B) pay higher dividends. C) shrink the size of the bank. D) sell securities the bank owns and put the funds into the reserve account.
When economists say an activity is consistent with economic efficiency, they mean
a. a majority of citizens favor the activity. b. the benefits that result from the activity exceed the costs. c. the number of people who gain from the activity exceeds the number on whom costs are imposed. d. the costs that result from the activity exceed the benefits.