Homework 1

A budget ________ occurs when government expenditures exceed tax revenues for a particular time period.

Defecit

When I purchase a corporate ________, I am lending the corporation funds for a specific time. When I purchase a corporation's ________, I become an owner in the corporation.

bond; stock

________ policy involves decisions about government spending and taxation.

Fiscal

How does the size of the U.S. budget deficit in 2010 compare to the time period since​ 1950?

It has expanded dramatically since 2007. In​ 2010, the​ deficit-to-GDP ratio was 10​ percent, well above the historical average of around 2 percent since 1950.

What is the typical relationship among interest rates on three-month Treasury bills, long-term Treasury bonds, and Baa corporate bonds?

They tend to move together over time with the corporate bond having the highest rate of interest

When stock prices fall

an individual's wealth may decrease and their willingness to spend may decrease.

High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.

discourage; encourage

There is a ________ association between inflation and the growth rate of money ________.

positive; supply

The management of money and interest rates is called ________ policy and is conducted by a nation's ________ bank.

monetary; central

Financial markets promote greater economic efficiency by channeling funds from ________ to ________.

savers; borrowers

Prior to almost all recessions since 1950, there has been a drop in

the growth rate of the money stock.