Which of the following contributed to the soaring housing prices during 2002-2005?
a. the Fed's low-interest rate policy
b. regulations that reduced the required down payment and other lending standards for home mortgages
c. the increased leverage lending by Fannie Mae, Freddie Mac, and large investment banks
d. all of the above
D
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An economics professor has devised an interesting game to test the understanding of his students. He randomly selects two students from his class and gives a $50 bill to one of them
He then asks him what percentage of $50 he would give to his classmate. The first student can choose any percentage he wishes, while the second student can choose whether or not to accept the offer. If the second student does not accept the offer, the professor will take the bill back but if he accepts the offer, the money will be divided in the ratio decided by the first student. a) What is the likely outcome of this game if both the students value more money to less? b) What is the likely outcome of this game if the second student values fairness?
At a price of $5, Tyrone buys 10 units of a product; when the price increases to $6, Tyrone buys 8 units. Which of the following is correct about Tyrone's behavior?
a. Tyrone's demand has decreased. b. Tyrone's demand has increased. c. Tyrone's quantity demanded has decreased, and his demand has not changed. d. Tyrone's quantity demanded has increased, and his demand has increased. e. Tyrone's demand has increased, and his quantity demanded has decreased.
A Herfindahl index of 0 suggests:
A. perfect competition. B. oligopoly. C. monopolistic competition. D. monopoly.
The market demand curve for a particular good
A. may or may not show a direct relationship between price and quantity demanded. B. may be less than an individual demand curve for the good. C. is the horizontal sum of all individual demand curves for the good. D. will not be affected by any of the determinants of individual demand.