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.
