Explain how the financial crisis turned into a major economic crisis
What will be an ideal response?
Hit by the decrease in housing prices and the collapse in stock prices, and worried that this might be the beginning of another Great Depression, people sharply cut back consumption. Worried about sales and uncertain about the future, firms sharply cut back investment.. Decreases in consumption and investment led to decrease in demand, which in turn, led to decrease in output.
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If the inflation rate is zero, the nominal interest rate is
A) greater than the real interest rate. B) positive and the real interest rate is negative. C) equal to the real interest rate. D) less than the real interest rate. E) equal to the inflation rate.
Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,500 per year. Based on this information, the income tax system is
A) proportional. B) progressive. C) regressive. D) bracketed.
The following table shows four firms, the amount each pollutes, the marginal cost for each firm to clean up pollution, and the total cost to each firm of eliminating all pollution.FirmTotal Discharge (in tons)Marginal Cost of Cleanup(per ton)Total Cost of CleanupA60$5.00$300B70$8.00$560C80$7.50$600D90$4.00$360The total discharge of these four companies is 300 tons. Assume there is no one else who pollutes and these firms want to maximize profits. If the government wishes to cut discharge by 50 percent, it could do so by establishing an effluent fee of:
A. $5.50 per ton. B. $10.00 per ton. C. $3.00 per ton. D. $4.50 per ton.
A proportional tax is one in which the fraction of income paid in taxes rises as a person’s income increases.
Answer the following statement true (T) or false (F)