The "housing bubble" discussed in the text book refers to:
A. housing prices rising much more quickly than the rest of prices in the economy.
B. housing prices within a certain area of the U.S. rising disproportionately with the rest of houses in the economy.
C. an unexplained increase in the demand for houses which caused the prices of houses to rise.
D. a supply shock to the housing market, which caused housing prices to increase.
A. housing prices rising much more quickly than the rest of prices in the economy.
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This month Jones bought $10 of fresh hops for making home-brewed lager. In principle, what happens to GDP?
A) Nothing, because it involves the production of homemade beer. B) Nothing, because the hops are an intermediate good. C) GDP increases by $10. D) GDP increases by $10 as long as Jones is satisfied with the final product.
Labor-augmenting technological change refers to improvements in efficiency that
A) occur without increasing the productivity of labor or the efficiency of capital goods. B) increase the productivity of labor and the efficiency of capital goods. C) increase the efficiency of capital goods without having to increase the productivity of labor. D) increase the productivity of labor but that do not directly make capital goods more efficient.
We don't typically see wages __________ in response to an economic downturn because ____________.
A. rise; they are "sticky," and are slow to respond to shifts in the economy B. rise; they cannot rise above the equilibrium in any circumstance C. fall; they are "sticky" and are slow to respond to shifts in the economy D. fall; they cannot fall below where they were previously set due to inflation
If John drives more recklessly because he has good automobile insurance, it is an example of moral hazard.
Answer the following statement true (T) or false (F)