Many state and local governments in the U.S. have balanced-budget laws in order to prevent politicians from:
A. Creating a "small government" economy
B. Succumbing to voters' strong preference for budget deficits
C. Facing a principal-agent problem
D. Collecting too much taxes
B. Succumbing to voters' strong preference for budget deficits
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In Fisher's model of the determination of the rate of return, the price of a "future good" is:
a. less than the price of a current good if the interest rate is negative. b. equal to the price of a current good if the interest rate is positive. c. greater than the price of a current good if the interest rate is positive. d. less than the price of a current good if the interest rate is positive.
If a bank has $1 million in demand deposits, $400,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:
a. $600,000. b. $400,000. c. $300,000. d. $100,000.