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Homework answers / question archive / 26) When the central bank engages in Quantative Easing: a
26) When the central bank engages in Quantative Easing:
a. it buys financial assets that it normally does not
b. it can still lower the interest rate that banks charge each other for overnight loans of reserves
c. it expands its balance sheet
d. both (a) and (c)
Question 27
27) Automatic Stabilizers in the government budget:
a. result in a decrease in tax revenues and increase in government spending on Social Services during a recession
.b. result in an increase in tax revenues and a decrease in government spending on Social Services during an expansion
c. have no effect on government tax revenue nor government spending on Social Services
d. both (a) and (b)
Question 28
28) Which of the following would increase short-run Aggregate Supply (AS) in the economy:
a, increased worker productivity
b. cut corporate tax rates to encourge investment in new economic capital
c. reduce unnecesary government regulations and red tape
d. all of the above
Question 29
29) In a customs union:
a. there is the free movement of goods and services among member countries, but not capital (money)
b, there is free trade in goods and services among member countries but each individual member determines its own trade policies with non-member countries
c.there is free trade among members and a common trade policy with non-members
d. member countries determine their own trade policies with each other
Question 30
29) Countries engage in protectionism to:
a. protect infant industries
b. retaliate against protectionist measures of other countries
c. to protect strategic inductries
d. all of the above
26.
Answer is d) both a and c
Quantitative easing (QE) is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment . It also expands the central bank's balance sheet.
27.
Answer is d) both a and b
Automatic Stabilizers in the government budget:
a. result in a decrease in tax revenues and increase in government spending on Social Services during a recession
.b. result in an increase in tax revenues and a decrease in government spending on Social Services during an expansion.
28.
Answer is d) all of the above.
The aggregate supply can be increased in the economy by taxes and subsidies. As mentioned reduction in corporate tax rate. Increased in productivity would expand output and hence impact the aggregate supply.
29. Answer is c)
c.there is free trade among members and a common trade policy with non-members
Sets common external tariffs among member countries, implying that the same tariffs are applied to third countries; a common trade regime is achieved. Custom unions are particularly useful to level the competitive playing field and address the problem of re-exports (using preferential tariffs in one country to enter another country.
29) answer is d) all of the above
a.Countries engage in protectionism in order to protect infant industries b. retaliate against protectionist measures of other countries c. to protect strategic inductries.
