In the events of the housing bubble collapsing, once the housing prices stopped increasing refinancing:
A. became less popular, and people's consumption overall dropped.
B. became more popular, and people's consumption accelerated overall.
C. was no longer an option, and a wave of foreclosures occurred.
D. no longer allowed people to borrow cash on the new value of their home, and spending slowed.
Answer: C
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The aggregate demand curve is usually
A) downward sloping. B) vertical. C) horizontal. D) upward sloping.
If we compare the Canadian natural unemployment rate to the U.S. natural unemployment rate, we find that for most years since 1980
A) the Canadian rate is higher, possibly the result of higher unemployment benefits in the United States for most of those years. B) the U.S. rate is higher, possibly the result of greater job search within a larger country. C) they are essentially the same because we have a lot in common. D) the Canadian rate is higher, possibly the result of higher unemployment benefits in Canada for most of those years. E) The U.S. rate is higher, possibly the result of more structural change occurring in the United States.
Which of the following statements is FALSE?
A) Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. B) Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand. C) Taxes and transfer payments affect aggregate demand by changing disposable income. D) An increase in disposable income leads to a decrease in aggregate demand.
Clifford lives by the motto "Eat drink and be merry today, for tomorrow doesn't matter
" If today's consumption is represented by "x" and tomorrow's consumption is represented by "y", then which of the following best represents Clifford's utility function? A) U = x - y B) U = x/y C) U = x D) U = y