Corporations can attract more lenders by offering a lower coupon on their bonds as compared to the government bonds
a. True
b. False
Indicate whether the statement is true or false
False
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Explain what an asset bubble is, when an asset bubble would form, and why the bubble will eventually burst
What will be an ideal response?
If the interest rate dropped, what would be the effect on spending?
a. Spending on automobiles would decrease. b. Business spending on new capital would decrease. c. Spending on consumer durables would decrease. d. Business spending on new factories would increase. e. Spending on new homes would decrease.
A system of nonattenuated (uncompromised) property rights is compatible with the achievement of economic efficiency
Indicate whether the statement is true or false
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds and monetary base in the context of the Three-Sector-Model? a. The quantity of real loanable funds rises and monetary base rises
b. The quantity of real loanable funds rises and monetary base falls. c. The quantity of real loanable funds falls and monetary base falls. d. The quantity of real loanable funds and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.