The economy suffered a mild recession in 2001. Despite the recession, home sales and durable goods sales remained high. Which of the following is a plausible explanation?
A) The Fed's pursuit of contractionary policy stimulated these markets.
B) The Fed caused a reduction in the federal funds rate to its lowest level in 40 years.
C) Rising inflation encouraged many to invest in the real estate market.
D) Home building and consumer durable purchases are always high during a recession.
Answer: B
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Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are
A) inferior goods. B) normal goods. C) complements. D) substitutes.
Other things constant, if there is an increase in the demand for goods now compared to goods in the future, we would expect that the
a. real interest rate would decline. b. capital investment rate would decline. c. current rate of saving would increase. d. real interest rate would rise.
In the event of a default by a borrower, the bank is not authorized to sell the borrower's collateral to pay off the loan
Indicate whether the statement is true or false
Which of the following is true about transactional relationships?
a. They are cost driven and arm's length b. They are vital to profitability c. They need and expect efficient service d. They do not have resources to waste with inefficient transactions, processes, processes, or partners e. All of the above