In a Business Cycle Boom,we Expect an Unusually ________ Proportion

question 53

Multiple Choice

In a business cycle boom,we expect an unusually ________ proportion of actual income to be transitory,thus an unusually ________ MPC operating in the short run,which ________ the income multiplier for the short run.

• A)high,low,reduces
• B)high,low,increases
• C)high,high,reduces
• D)low,low,increases
• E)low,high,reduces

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Definitions:

Fannie Mae

A government-sponsored enterprise established to expand the flow of mortgage money by creating a secondary market for mortgage loans.

Money Market Instrument

Short-term financial instruments that are highly liquid and considered safe, such as treasury bills and certificates of deposit.

Preferred Stock

A class of ownership in a corporation with a fixed dividend, senior to common stock but junior to bonds in claim on assets and earnings.

Commercial Paper

Short-term unsecured promissory notes issued by companies to finance their short-term liabilities.