1. In the classical case, (A) the fiscal policy multiplier is zero (B)crowding out cannot occur?

C)investment does not respond to interest rate changes

D)an increase in the income tax rate cannot lower the budget deficit

E)monetary policy is totally ineffective

2. Which of the following describes a part of the transmission mechanism?

A)a change in real money balances causes a portfolio disequilibrium and asset holders%26#039; reactions influence interest rates

B)an income tax rate cut stimulates private spending but the resulting interest rate increase dampens the income expansion

C)the Fed undertakes open market purchases and the resulting interest rate increase encourages people to save more

D)an increase in government spending is partially offset by the crowding out of private investment

E)both B) and D)

3. If the bank pays you a nominal interest rate of 2.5% on your savings and the rate of inflation is 4%, what is the real rate of return on your savings?

A)+6.5%

B)+2.5%

C)+1.5%

D)-1.5%

E)-4.0%

1. In the classical case, (A) the fiscal policy multiplier is zero (B)crowding out cannot occur?fha loan

1 - b

2 - c

3 - d

I hope this isn%26#039;t for a grade.

:-)