Which of the following contributed to the financial crisis of 2008?
What will be an ideal response?
a. the housing price boom (2002-2005), followed by a housing price bust (2007-2008)
b. a sharp reduction in stock prices in 2008
c. a sharp increase in the price of crude oil from January 2007 to mid-year 2008
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Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?
What will be an ideal response?
When a market is efficient, the
A) sum of consumer surplus and producer surplus is maximized. B) deadweight gain is maximized. C) quantity produced is maximized. D) marginal benefit of the last unit produced exceeds the marginal cost by as much as possible. E) total benefit equals the total cost.
The ratio of the percentage change in quantity demanded to the percentage change in income is known as the cross elasticity of demand.
Answer the following statement true (T) or false (F)
Ricardian equivalence suggests that forward looking households ________ the future taxes required to pay off government debt, so that reductions in lump-sum taxes have ________ effect on the economy
A) fully anticipate; a multiplied B) fully anticipate; no C) are unaware of; a negative D) are unaware of; a positive