A friend is telling you that they tend to drink more at parties than they do at home. You ask about why and they tell you that though they enjoy their fifth and sixth drinks the same regardless of where they are. Based on the fact that it is free at the party and they have to pay to replace it at home, you can translate the statement into a verification of
A. the notion of diminishing marginal utility.
B. the real-balances effect.
C. the substitution effect.
Answer: A
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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.
In general, demand curves for necessities tend to be price elastic
a. True b. False Indicate whether the statement is true or false
Which list ranks assets from most to least liquid?
a. money, bonds, cars, houses b. money, cars, houses, bonds c. bonds, money, cars, houses d. bonds, cars, money, houses
In order to achieve the socially optimal level of output, goods that entail negative externalities should be:
A. taxed. B. banned. C. provided by the government. D. subsidized.