If the economy grows the governments budget position should automatically
Worsen
Improve
Stay the same
Decrease with inflation
The precautionary demand for money is
An idle balance
An active balance
Directly related to interest rates
Inversely related to income
A outside shift in the demand for money other things being equal should lead to
A lower interest rate but the same quantity of money
A higher interest rate but the same quantity of money
A higher quantity of money but lower interest rates
A higher quantity of money but the same interest rate
The marginal rate of tax paid is
The total tax paid/ total income
Total income/ total tax paid
Change in the tax paid/ change in income
Change in income/ change in tax paid
The liquidity trap occurs when the demand for money
Is perfectly interest elastic
Is perfectly interest inelastic
Means that an increase in money supply leads to a fall in the interest rate
Means that an increase in the money supply leads to an increase in the interest rate
A fall in interest rates is likely to
Increase aggregate demand
Increase savings
Decrease consumption
Decrease exports
To reduce the supply of money the government could
Reduce interest rates
Buy back government bonds
Sell government bonds
Encourage banks to lend
