Subprime mortgages are
A) mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages.
B) mortgages which are bundled together by financial institutions and sold to investors.
C) mortgages issued to borrowers with flawed credit histories.
D) government-backed mortgages issued by Fannie Mae and Freddie Mac.
Answer: C
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Which of the following observations is not true of a budget line?
A. It indicates what choices are available to the consumer. B. It is a curve of constant expenditure. C. Its slope reports the market terms on which the consumer can trade one good for another. D. It helps examine the consumer’s preferences.
Which of the following is a possible government solution to the problem posed by a good with an external benefit?
A) Give a voucher to buyers of the good. B) Tax the consumption of the good. C) Tax the production of the good. D) All of the above are possible solutions.
Assume that data are available on other characteristics of the subjects that are relevant to determining the experimental outcome. Then including these determinants explicitly results in
A) the limited dependent variable model. B) the differences in means test. C) the multiple regression model. D) large scale equilibrium effects.
If equilibrium income is $500 billion, MPC = 0.8, MPI = 0.2 and autonomous government spending increases by $20 billion, the new equilibrium income will be _____
a. $600 billion b. $550 billion c. $525 billion d. $520 billion e. $500 billion