Answer the following statement true (T) or false (F)
1) Logrolling can either increase or diminish economic efficiency.
2) Even if a majority of the population wants a law and the law is passed, the outcome may still
be economically inefficient.
3) The paradox of voting is that under majority voting rules the median voter decides the election
outcome.
4) Majority voting assures that government will provide a public good if it yields total benefits in
excess of total costs.
1) T
2) T
3) F
4) F
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In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, an increase in the reserve requirement ________ the demand for reserves, ________ the federal funds rate, everything
else held constant. A) decreases; lowering B) increases; lowering C) increases; raising D) decreases; raising
If there is a dollar-for-dollar direct expenditure offset, then
A) increases in aggregate demand will also increase long-run aggregate supply. B) increases in government spending will not increase aggregate demand. C) increases in aggregate demand will increase the price level, but leave real output unchanged. D) increases in aggregate demand will increase real output, but leave the price level unchanged.