1. A legislative committee is weighing the pros and cons of a clean-air program.
ID: 1109534 • Letter: 1
Question
1. A legislative committee is weighing the pros and cons of a clean-air program. If it spends $1 million on the program, the air will be cleaned by 35 percent. After comparing opportunity costs and benefits at the margin, the committee agrees to fund the program with $2 million. Why did it not choose to appropriate $3 million?
a. At $3 million, the air is not improved as much as the committee would like
b. At $3 million, the costs are no longer worth the benefits
c. It was too much to spend without a guarantee
d. The air is improved the same amount whether $2 million or $3 million is spent
2. The Securities and Exchange Commission is
a. an independent agency that advises the government about financial markets
b. a government agency that sells treasury bond and other United States financial obligations
c. a government agency that regulates financial markets and investment companies
d. a privately owned investment corporation that sells bonds and other investments
3. How do changes in interest rates affect the money supply?
a. as interest rates fall, people generally hold more cash, restricting the money supply
b. as interest rates rise, people generally keep their wealth in assets that pay returns, expanding the money supply
c. as interest rates level off, people charge more and hold more cash, expanding the money supply
d. as interest rates rise, people generally keep their wealth in assets that pay returns, restricting the money supply
Explanation / Answer
Answer:
1.
Option B :
At $3 million, the costs are no longer worth the benefits .
2.
Option C:
A government agency that regulates financial markets and investment companies.
It will modulate the stock market also it protects stock market investors by making the market transaparent.
3.
Option C:
As interest rates level off, people charge more and hold more cash, expanding the money supply.
when the interest rates reduced the people would like to hold more cash and spend there by increasing the money supply in the economy.
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