The tendency of changes in asset prices to affect spending on consumption goods is called the ________ effect.
A. multiplier
B. wealth
C. income
D. substitution
Answer: B
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At the beginning of the financial crisis, banks were hurt by all of the following EXCEPT
A) declines in the value of mortgage-backed securities. B) defaults on mortgages by those with subprime mortgages. C) holding too many Treasury bonds. D) not being repaid on loans to real estate developers.
Political institutions are more likely to allow and encourage the emergence of good economic institutions and policies when
a. the top government executives have enough power to impose good economic arrangements on the nation. b. constitutional constraints prevent laws and regulations that weaken the rights of property owners, curtail voluntary exchange, and provide for decentralization of government. c. the elected executive and legislative branches have fewer constraints on what they can do, leaving them free to innovate and improve economic institutions. d. well organized interest groups exert a powerful influence on the political process.
A change in demand of a good is shown by a:
A. movement along a demand curve. C. movement along the demand function. D. shift of the demand function.
Consider a society that is producing inside its production possibilities frontier. This society could best achieve efficiency in its production of output by:
A. increasing the levels of wages and prices. B. producing relatively more capital goods and relatively fewer consumer goods. C. fully employing all available resources. D. distributing incomes more equally.