What are the benefits of bankruptcy laws that enable lenders to seize the assets of firms that default on loan contracts?
What will be an ideal response?
When borrowers are aware that default will lead to asset seizure, they will work harder to avoid default. When lenders know that borrowers will do all they can to avoid default, they will offer more funds at lower cost. The result is more and more-productive economic activity. When default occurs, the seizure of assets is a reallocation of resources that raises their value and supports economic growth.
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If Congress passes legislation to increase government purchases to counter the effects of a recession, then this would be an example of a(n)
A. nondiscretionary fiscal policy. B. supply-side fiscal policy. C. contractionary fiscal policy. D. expansionary fiscal policy.
Open market sales shrink ________ thereby lowering ________
A) the money multiplier; the money supply B) the money multiplier; reserves and the monetary base C) reserves and the monetary base; the money supply D) the money base; the money multiplier
The only disease-specific group eligible for Medicare are those suffering from AIDS
a. end-stage renal disease. b. advanced coronary artery disease. c. metastasized cancer. d. diabetes
An increase in the price of plastic raises the cost of manufacturing DVDs. As a result, the market changes to a new equilibrium because of a(n):
a. surplus of DVDs. b. increase in the demand for DVDs. c. leftward shift in the demand curve for DVDs. d. leftward shift in the supply curve for DVDs.