Kahneman and Tversky are correct about "mental accounts," household budgeting
A. should have no effect on spending.
B. should help families cut back on spending.
C. will encourage families to earn more money than they would if they did not budget.
D. leads families to spend more than if they did not budget.
Answer: B
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If the demand for iPods is price elastic, then
A) the percentage change in quantity demanded is equal to the percentage change in price. B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). C) quantity demanded is not responsive to changes in price. D) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value).
Why did so many banks sit on their reserves during the financial crisis of 2008–2009?
a. They expected the United States to declare war soon. b. They were waiting for the stock market to take a plunge. c. They feared that borrowers would not pay back their loans. d. They opposed the policies of the presidential administration.
Which of the following is a government expenditure, but is not a government purchase?
A) The federal government buys a Humvee. B) The federal government pays the salary of an FBI agent. C) The federal government pays out an unemployment insurance claim. D) The Federal government pays to support research on AIDS.
Answer the following statements true (T) or false (F)
1. The Fed traditionally can grant loans to commercial banks, but not to investments banks and securities firms. 2. The Financial Crisis of 2007-2008 halted the consolidation in the U.S. financial industry that had caused a declining number but increasing size of firms in the industry prior to the crisis. 3. The so-called moral-hazard problem in financial management refers to the fact that managers will tend to take on more risk if they know that they are somehow insured against some or all of their losses. 4. The TARP loans and the Fed's lender-of-last-resort actions that bailed out large, failing financial institutions helped reduce the moral-hazard problem in financial management. 5. Insurance companies are a major category of financial institutions.