What limited the effectiveness of monetary policy during the Financial Crisis of 2007-2009?
What will be an ideal response?
During the financial crisis, the default risk premium soared as investors feared that firms would have difficulty repaying their loans or making the coupon and principal payments on their bonds. By the end of 2008, the Fed had caused the federal funds rate to fall nearly to zero, but the rise in the risk premium counteracted the effects of the Fed's expansionary policy. The Fed attempted to bring down long-term interest rates by taking the unusual step of directly buying both 10-year Treasury notes and mortgage-backed securities, but the Fed was not able to entirely offset the effects of the increase in the risk premium.
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The table above shows the payoff matrix for a prisoners' dilemma. In the Nash equilibrium
A) both prisoners get 3 years in jail. B) both prisoners get 2 years in jail. C) both prisoners get 1 year in jail. D) both prisoners get 10 years in jail.
What is rule of reason?
What will be an ideal response?
In the Keynesian model, an aggregate demand shock
A) will cause the aggregate demand curve to shift, leading to a change in the price level and real GDP. B) will cause the aggregate demand curve to shift, leading to a change in the price level but not real GDP. C) will cause the aggregate demand curve to shift, leading to a change in real GDP but not the price level. D) will not lead to a shift of the aggregate demand curve.
In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500 . Maconia had 5% growth in real GDP per person. In 2012 it had a population of 8,400 . To the nearest dollar what was real GDP in Maconia in 2012?
a. 216,815 b. 221,025 c. 226,416 d. None of the above is correct.