The crowding-out effect implies that restrictive fiscal policy will
a. increase aggregate demand and employment.
b. lead to a significant increase in the natural rate of unemployment.
c. be highly effective against inflation.
d. reduce real interest rates.
D
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As the housing bubble began to burst in 2006-2008, investors would only buy mortgage-backed securities at high yields to compensate for higher perceived default risk. As a result::
A) banks suffered significant capital losses as the value of their holdings of mortgage-backed securities declined B) funds available for mortgages increased C) bank profits rose as they earned higher interest on mortgages D) the price of mortgage-backed securities tended to rise due to the higher yields
The assumption that firms attempt to maximize profits will yield good predictions even if firms sometimes pursue other goals.
Answer the following statement true (T) or false (F)
The You Look Marvelous! cosmetic company is considering building a new shampoo factory. Its accountants and board of directors meet and decide that it is not a good idea to build the factory. If interest rates fall after the meeting
a. the present value of the factory rises. It's more likely the company will build the factory. b. the present value of the factory rises. It's less likely the company will build the factory. c. the present value of the factory falls. It's more likely the company will build the factory. d. the present value of the factory falls. It's less likely the company will build the factory.
Mutual funds, pension plans, and life insurance policies:
A. are all forms of savings. B. all entrust a professional to decide which financial assets are the best for the saver to hold. C. differ regarding when you can have access to the asset's worth. D. All of these are true.