By the height of the housing bubble in 2005 and early 2006, lenders had greatly loosened the standards for obtaining a mortgage loan, with many mortgages being granted to ________ borrowers with flawed credit histories and ________ borrowers who did
not document their incomes.
A) adjustable rate; shadow-banking B) "fresh-start"; prime rate
C) sub-prime; "Alt-A" D) "credit crunch"; black market
C
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Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers?
A) international commodity agreement B) export promotion C) multilateral contract D) import substitution E) export subsidies
Which of the following is not a consideration when attempting to eliminate a free rider problem or tragedy of the commons problem?
A. The social costs must be realized by the individual. B. Something must be done to alter individuals' trade-offs. C. Market participants must internalize the value of the externality. D. Firms must be forced to provide the good or service at a price that is below profit maximizing price.
If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Mr. Smith is a utility-maximizing consumer, he should:
A. decrease his spending on cola. B. decrease his spending on cola and increase his spending on shirts. C. increase his spending on shirts. D. increase his spending on cola and decrease his spending on shirts.
“If taxes and government spending are increased by the same amount, there will still be a positive effect on equilibrium GDP.” Explain.
What will be an ideal response?