When the housing bubble occurred it can be attributed to all of the following except:
A. homeowners lack of confidence in the institutions who made the loan to them.
B. it became easier to leverage more of a home's value, putting buyers more into debt.
C. people expected housing prices to continue to rise.
D. the seller of the mortgage had lost incentive to properly assess the risk.
Answer: A
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As the equilibrium price falls in a perfectly competitive market, so do firms':
A. revenue and so do their profits. B. average costs and so do their profits. C. revenue, and their profits rise. D. total costs, and their profits rise.
When the prices of food and gasoline are added to core inflation, we get:
A. core deflation. B. headline inflation. C. hyperinflation. D. adjusted inflation.
The ultimate purpose of an economic model is to
a. explain reality as completely as possible b. establish assumptions that closely resemble reality c. help us understand economic behavior d. determine what each decision maker wants to maximize e. guide government policy decisions
A rising budget deficit created through government spending may result in a fall in domestic investment, a rise in private savings, or a rise in the _________ deficit.
a. economic b. trade c. government d. savings