The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2Which of the following would be most appropriate if the Federal Reserve wanted to increase the money supply in order to stimulate the economy?
a. Buy U.S. government securities.
b. Force the Treasury to reduce the national debt.
c. Raise the discount rate.
d. Increase the reserve requirements.
QUESTION 3The vicious circle of poverty refers to the fact that LDCs are poor because other countries do not want to buy their goods and services.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The term open market operations refers to the:
a. loan-making activities of commercial banks.
b. effect of expansionary monetary policy on interest rates.
c. operation of competitive markets in the banking industry as the result of deregulation.
d. buying and selling of government securities by the Federal Reserve.
QUESTION 5The vicious circle of poverty is the trap that parents with low education tend to have children with low education.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Which of the following is the most frequently used tool the Fed uses to control the supply of money?
a. The discount rate. b. The reserve requirements.
c. Open market operations. d. The 30-year home-mortgage interest rate.
QUESTION 7Economists believe that political instability can facilitate economic development in an LDC by making its citizens more open to change and new technology.
a. True
b. False
Indicate whether the statement is true or false
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