Based on the graph showing how the subprime share of home mortgages grew rapidly before the big decline, by Q2 of 2008, the gap between adjustable mortgage rates and the share of subprime mortgages was ______.
a. the greatest it had ever been
b. the smallest it had ever been
c. narrowing
d. expanding
c. narrowing
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An increase in first-period income results in
A) an increase in first-period consumption, an increase in second-period consumption, and an increase in saving. B) an increase in first-period consumption, a decrease in second-period consumption, and an increase in saving. C) a decrease in first-period consumption, an increase in second-period consumption, and an increase in saving. D) an increase in first-period consumption, an increase in second-period consumption, and a decrease in saving.
Which of the following statements about a non-discriminating monopoly firm is correct?
a. It charges a price greater than its marginal cost. b. Its high prices generate inflation. c. It charges a price that maximizes its total revenues. d. As a price setter, it can ignore market demand. e. It has no incentive to produce each output level at the lowest possible cost.
The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
a. only if buyers and sellers really care, personally, about economic efficiency. b. if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely. c. even when each market participant cares only about their own self-interest rather than about the overall efficiency of resource use. d. even if business firms fail to produce goods efficiently.
Monetary policy has short-run effects on which of the following?
A) the level of output but not its composition B) both the level and composition of output C) only the price level D) only the nominal interest rate, not the real interest rate E) none of the above