What is the domino effect or contagion?
What will be an ideal response?
The definition is the vulnerability of even seemingly healthy economies to crisis of confidence generated by events elsewhere in the world. Students should provide examples like the Thai crisis, which provoked another crisis in South Korea, a much larger economy some 7,000 miles away. Or the Russian crisis sparking massive speculation against the Brazil's real.
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The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the
A) interest rate effect. B) price effect. C) international trade effect. D) wealth effect.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
A) cut the federal government's ties with Fannie Mae and Freddy Mac. B) prohibits banks from selling mortgage backed securities, which were largely to blame for the financial market crisis in 2007-2008. C) eliminated the Federal Deposit Insurance Corporation. D) had restrictions that try to limit risky investment by banks.
Suppose purchasing power parity holds. If the price level in the United States is 100 dollars per good and the price level in Japan is 250 yen per good, then the nominal exchange rate is ________ yen per dollar
A) 0.25 B) 0.4 C) 2.5 D) 4.0
Payments to households not in exchange for goods and services currently produced are:
A. transfer payments. B. government purchases. C. consumption expenditures. D. investment expenditures.