The Lehman Brothers bankruptcy triggered a financial panic that featured a(n)
A. increase in Treasury interest rates and an increase in most other interest rates.
B. increase in Treasury interest rates and a decrease in most other interest rates.
C. decrease in Treasury interest rates and an increase in most other interest rates.
D. decrease in Treasury interest rates and a decrease in most other interest rates.
Answer: C
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Assume that beer is a normal good. If the price of beer rises, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good
A) more, more B) more, less C) less, more D) less, less
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
Behavioral economists focus on the assumption that
A. consumers have limitations that prevent them from examining all possible choices when they make decisions. B. consumers are irrational and so they do not seek to maximize utility. C. consumer choice is perfectly predictable by basic economic theory. D. consumer behavior cannot be predicted by economics.
Which of the following is NOT a possible solution to the problem of pollution?
A. imposing a pollution tax on producers B. converting a resource that is communally owned into a privately owned resource C. regulating the quantity of pollution that can be generated D. subsidizing the costs of production of activities that generate pollution