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14. Here’s a rough-and-ready way to approximate a bond’s yield: Approximate yield = Market price /...

14. Here’s a rough-and-ready way to approximate a bond’s yield:

Approximate yield = Market price / Coupon rate

Approximate yield = Coupon rate / Years to maturity

Approximate yield = Market price / Years to maturity

Approximate yield = Coupon rate / Market price

15. Monetary policy and fiscal policy differ insofar as _________________________ .

   a. the former deals with full employment and the latter deals with unemployment

   b. the former deals with inflation and the latter deals with deflation

   c. the former deals with the Federal Reserve and the latter deals with the federal government

   d. the former is less effective than the latter

16. Cutting taxes and raising federal government expenditures is associated with a(n) __________________ .

   a. contractionary Keynesian policy

   b. expansionary Keynesian policy

   c. contractionary supply-side policy

   d. expansionary supply-side policy

17. Cutting taxes and reducing federal government expenditures is associated with a(n) __________________ .

   a. contractionary Keynesian policy

   b. expansionary Keynesian policy

   c. contractionary supply-side policy

   d. expansionary supply-side policy

18. Supply-side economists hoped to stimulate the economy by ______________ .

   a. reducing the money supply

   b. increasing taxes on the wealthy

   c. raising incentives to work and raising investment

   d. increasing the scope of government regulations

19. We associate which of the following economists with the use of expansionary fiscal policy to deal with recession?

   a. Adam Smith

   b. Karl Marx

   c. John Maynard Keynes

   d. Milton Friedman

20. We associate which of the following presidents with the first post-WWII advocacy of an expansionary fiscal policy to deal with recession?

   a. Franklin D. Roosevelt

   b Harry Truman

   c. John F. Kennedy

   d. Ronald Reagan

21. We associate which of the following presidents with first advocacy of supply-side economics?

   a. John F. Kennedy

   b. Ronald Reagan

   c. Bill Clinton

   d. George W. Bush

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Homework Answers

Answer #1

14) Answer: D : Appr Bond yield = Coupoun rate /Market price

Approximate bond yield is the direct annual annual cash flows by the market price of the bond. Direct annual cash flows are the coupoun payments

15) In improving a real economy fiscal policy is always more effective than the monetary policy. Fiscal policy effects consumers in positive way by increasing employment and income in the economy.

Answer: The former is less effective than later

16) Increase in federal government expednitures and decrease in tax rates is called expansionary keynesian policy, This policy either increase the budget defecit or decrease the budget surplus.

Answer: B

20) According to past events in 1960John F Knnedy used this expansionary monetary policy to fight with recession at that time.

Answer:C

21) John Kennedy is the one to advocate supply side policy in 1963 to raise revenues

Answer: A

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