Explain how the use of leading economic indicators to predict recessions can lead to less accurate policy decisions
The use of leading economic indicators to predict future trends can make policy decisions less accurate. For example, if the government responds with policies to combat the recession as soon as the leading economic indicators begin predicting one, then the recession that would have occurred may fail to materialize. On the other hand, a self-fulfilling prophecy may result if businesses respond with cutbacks in orders for plant and equipment as soon as the leading economic indicators begin predicting a recession.
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Most private turnpikes failed to earn profits because
a. tolls were easily avoided. b. it was too costly to carry freight by land carriage. c. they faced extensive competition from steamboats, canals and railroads. d. dishonest gatekeepers often pocketed the tolls collected. e. All of the above.
A decrease in demand could be caused by a. an increase in price
b. a decrease in the price of a complement. c. a technological advance. d. a decrease in the price of a substitute.
Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB, QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB, QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. What is Dan's total profit assuming he is producing both products at their profit-maximizing sales quantities?
A. $3,600 B. $4,000 C. $4,400 D. $4,500
Mortgage loans made to borrowers with a more limited ability to repay are known as
a. subprime mortgages. b. credit default swaps. c. leveraged securities. d. mortgage backed securities.