In the financial crisis that started in 2006, a significant indicator of the U.S. economic decline was:
A. a significant drop in interest rates.
B. a sharp increase in unregulated Ponzi-type security sales.
C. rising defaults by subprime mortgage borrowers.
D. a large increase in loan default due to unemployment.
Answer: C. rising defaults by subprime mortgage borrowers.
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On the 45-degree line diagram, for points that lie below the 45-degree line,
a. planned aggregate expenditure is greater than GDP. b. planned aggregate expenditure is less than GDP. c. planned aggregate expenditure is equal to GDP. d. planned aggregate expenditure is less than aggregate income.
Assume the total real output of a developing country increases from $8 billion to $8.2 billion while its population expands from 14 to 15 million people from one year to the next. Over the year, real GDP per capita has ________.
A. decreased by $25 per person B. increased by $533 per person C. decreased by $533 per person D. increased by $25 per person
The Ricardo-Barro effect says that
A) government budget deficits have no crowding out effect because taxpayers increase their savings to match the quantity of loanable funds demanded by the government. B) government budget deficits crowd out private investment and thereby lower the real interest rate. C) government budget deficits resulting from an increase in government expenditure have no effect on investment but government deficits resulting from a decrease in taxes crowd out investment. D) government budget deficits cause households to save more in anticipation of higher taxes, which causes higher real interest rates.
The EU currently is a preferential trade agreement with no governmental institutions
Indicate whether the statement is true or false