The federal budget deficit becomes _____ during recessions because _____
a. smaller; transfer payments increase and tax revenues decline
b. larger; transfer payments increase and tax revenues decline
c. larger; both transfer payments and tax revenues increase
d. smaller; both transfer payments and tax revenues increase
e. smaller; both transfer payments and tax revenues decrease
b
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Consider the market for bread. If the price of wheat rises, then the
A) demand curve for bread shifts leftward. B) supply curve of bread shifts leftward. C) price of bread falls. D) equilibrium quantity of bread increases. E) demand curve for bread shifts rightward.
Interest rate fluctuations
A) are usually not considered to be of much importance and are largely ignored by the Fed. B) have the paradoxical effect of increasing the rate of economic growth. C) make it difficult for households and firms to plan for the future. D) have largely been eliminated by the Fed during the past two decades.