The negative impact of the loss of value of collateralized assets is due to
A) asymmetric information.
B) Ricardian Equivalence.
C) limited commitment.
D) financial intermediation through banks.
C
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An increase in interest rates by the Fed based on a given and unchanged policy reaction function represents a ________ the aggregate demand curve, and higher interest rates resulting from an upward shift in the Fed's policy reaction function represents a ________ the aggregate demand curve.
A. movement up; shift left of B. movement up; shift right C. shift left of; movement up D. shift left of; shift right of
According to real business cycle theory,
A. monetary factors affecting aggregate demand cause macroeconomic instability. B. when real wages fall during recessions, "real" unemployment rates rise. C. recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand. D. the net long-run costs of business fluctuations are severe.
Which of the following would shift the money demand curve to the left?
a. A decrease in the price level. b. An increase in the interest rate. c. An increase in the price level. d. An increase in real income. e. None of the above.
Suppose that the Beltrand family owns a farm near San Angelo, Texas. Three options exist for how to best use the farm:
Option 1: Raise lambs and earn a profit of $425,000. Production expenses are $200,000. Option 2: Raise cattle and earn a profit of $475,000. Production expenses are $400,000. Option 3: Grow cotton and earn a profit of $600,000. Production expenses are $300,000. Which option should the Beltrand family undertake and what is the opportunity cost in this decision? A) Option 2, $425,000 B) Option 1, $600,000 C) Option 3, $475,000 D) None of the above