The decrease in investment that occurred as a result of banks being unwilling to lend to businesses after the collapse of the housing bubble caused aggregate:
A. supply to increase.
B. demand to increase.
C. supply to decrease.
D. demand to decrease.
Answer: D
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Modern hedge funds typically make investments that involve
A) hedging. B) speculating. C) acquiring safe, short-term assets. D) focus on stocks instead of bonds.
If Q is total real output, K is capital in use, L is labor employed, an increase in the productivity of labor would imply a(n): a. increase in K/L
b. increase in L/K. c. increase in Q/L. d. decrease in Q/K. e. decrease in (Q + K)/L.
The real balances effect predicts that higher prices:
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less. b. make people worse off by reducing the value of their wealth, leading them to save less and spend more. c. make people better off by increasing the value of their wealth, leading them to save less and spend more. d. increase borrowing, leading to higher interest rates and less investment. e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods.
Which of the following is the largest asset on a consolidated balance sheet for a commercial bank?
a. Checkable deposits b. government bonds c. Cash assets, including reserves d. Loans e. Borrowing from the Federal Reserve