1) The relationship between the interest rate and the asset demand for money is
ID: 1164393 • Letter: 1
Question
1) The relationship between the interest rate and the asset demand for money is
nonexistent.
2) In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is
3)When analyzing the effects of the government budget deficit
4)The theory that government borrowing may function like an increase in taxes, that is, reducing current consumption and business expenditures, was formulated by
positive. inverse. positive sometimes and inverse other times.nonexistent.
2) In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is
fiscal policy. tax rates and the progressivity of the income-tax system. government spending and various transfer-payment programs. the difference between the discount rate and the federal funds rate.3)When analyzing the effects of the government budget deficit
no distinction must be made between an economy where full employment exists and one where substantial unemployment exists. it is important to examine the effects of the reported capital budget and the reported operating budget separately. there should be a comparison of the effect of the deficit to the effects of higher taxes needed to eliminate it. the baseline budget should be used since it is the most accurate.4)The theory that government borrowing may function like an increase in taxes, that is, reducing current consumption and business expenditures, was formulated by
John Maynard Keynes Jean Baptiste Say. David Ricardo. Adam Smith.Explanation / Answer
1. Ans : Inverse
2. Ans: the difference between the discount rate and the federal funds rate.
Explanation :
In addition to open market operations and the required reserve ratio , the difference between the discount rate and the federal funds rate is used as a tool of monetary policy available to Fed.
3. Ans : it is important to examine the effects of the reported capital budget and the reported operating budget separately.
4.Ans : David Ricardo
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