In events leading to the collapse of the housing bubble, inflated home values caused consumers to:
A. spend less and save more.
B. hold their savings to equity in their homes and stop saving more liquid forms of assets.
C. save less and spend more.
D. spend more on homes and less on all other goods.
Answer: C
You might also like to view...
Which of the following is correct?
a. The Fed can control the money supply precisely. b. The amount of money in the economy does not depend on the behavior of depositors. c. The amount of money in the economy depends in part on the behavior of banks. d. None of the above is correct.
Depression and lost self-esteem are examples of the ________ costs of unemployment, while the lost income and tax revenue are examples of the ________ costs of unemployment.
A. psychological; economic B. economic; psychological C. economic; social D. social; psychological
Technological changes that increase productivity shift the
A. Marginal cost curve upward. B. Production function downward. C. Marginal physical product curve downward. D. Average total cost curve downward.
Under what circumstances would the GDP deflator be less than 100 after the base year?
A) The GDP deflator will be less than 100 if there has been inflation relative to the base year. B) The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. C) The GDP deflator will be less than 100 if there has been deflation relative to the base year. D) There are no circumstances under which the GDP deflator could be less than 100.