When the housing bubble collapsed, the entire borrowing and lending engine of the economy ground to a halt because:
A. banks wanted to lend to no one, in case they turned out to be a bad risk.
B. the herd instinct became to not borrow or lend.
C. no one could tell which banks were safe, and which were not.
D. All of these statements are true.
Answer: D
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The fixed-rate payer in a swap contract pays a
A) current capital market rate. B) capital market rate minus one percentage point. C) capital market rate plus one percentage point. D) capital market rate plus a premium based on creditworthiness.
The equilibrium compensating wage differential between two occupations in the same city is $10 per hour. Both occupations have equivalent training requirements. Shannon works in the higher-paying occupation and would have been willing to do so even if the compensating differential was $5 per hour. Therefore,
a. Shannon will migrate to the lower-paying occupation b. Shannon must have a greater distaste than the typical worker for the nonmonetary characteristics of her occupation c. the equilibrium compensating wage differential is more than enough to prevent Shannon from moving to the other job d. the higher-paying occupation cannot have a perfectly competitive labor market e. Shannon must have a greater preference than the typical worker for the lower- paying occupation
A decrease in the cost of production will shift the supply curve down and to the right.
Answer the following statement true (T) or false (F)
The demand curve for the product of a perfectly competitive firm is
A. perfectly inelastic. B. upward sloping. C. perfectly elastic. D. downward sloping.