During the financial crisis of 2007–2009, the interest rate on mortgage-backed securities had
A. increased and the Treasury interest rate had risen.
B. increased and the Treasury interest rate had fallen.
C. decreased and the Treasury interest rate had risen.
D. decreased and the Treasury interest rate had fallen.
Answer: B
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During the Civil War years,
a. the slight stimulus to manufacturing was startling. b. iron production for both small arms and railroads increased rapidly. c. production of boots and shoes in Massachusetts nearly doubled. d. Both b and c are correct.
If lenders think that a particular borrower might default, they will demand a:
A. higher interest rate to make it worth taking that risk. B. lower interest rate to make it worth taking that risk. C. higher interest rate to decrease the amount of risk incurred. D. lower interest rate to decrease the amount of risk incurred.
Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?
a. The government b. Firms c. The foreign sector d. Investors e. Households
Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in long-run macroeconomic equilibrium. For Year 2, graph aggregate demand, long-run aggregate supply, and short-run aggregate supply such that the condition of the economy
will induce the Federal Reserve to conduct an expansionary monetary policy. Briefly explain the condition of the economy and what the Federal Reserve is attempting to do. What will be an ideal response?