According to this Application, some households were willing to take on considerable mortgage debt because
A) they realized the mortgage debt would be more than offset by the tax deductions they could take on the interest paid on their mortgage loans.
B) this was a safe investment in light of the rapidly increasing inflation in the economy.
C) the government's federal home mortgage insurance program would compensate them for any loss in value they may realize based on the purchase price of their homes.
D) they were confident they could make money as the values of their homes increased.
D
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Other things being equal, the lower planned real expenditures along an aggregate demand curve are, the
A) lower the level of endowments. B) higher the price level. C) lower the price level. D) more the production possibilities cure shifts to the left.
When you buy at a low price in one market then sell at a higher price in another market you are engaging in
A) arbitrage. B) price discrimination. C) odd pricing. D) an antitrust prohibited practice.
The discount rate is the interest rate that
A) commercial banks charge their customers. B) commercial banks charge each other for the loan of reserves. C) the Fed charges the government for loans. D) the Fed charges commercial banks when it loans reserves to the banks. E) the Fed pays commercial banks on their reserves held at the Fed.
Cole was discussing the market for cocoa beans with his friend John Schmidt
Cole said, "Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years, the price of cocoa beans has been rising and rising and people are buying more and more. I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.