Interest rates in the United States were low for an extended period after the recession of 2001 . Many cite these low levels as a major reason for fueling housing speculation that caused the Great Recession. Which of the following was a cause of low interest rates in the United States?
a. Loose monetary policies by the Federal Reserve.
b.Muted inflationary expectations.
c. Strong capital inflows from foreign countries with high saving rates.
d. All of the above.
.D
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After a firm makes both short and long run adjustments to its production plan following an increase in the output price,
A. the marginal product of capital will be higher. B. the marginal product of labor will be lower. C. the technical rate of substitution will be unchanged. D. (a) and (c) E. (b) and (c) F. (a) and (b) G. All of the above. H. We cannot tell for sure -- so none of the above.
According to the Lucas critique, what is the proper way to evaluate a proposal that reduces government borrowing by raising taxes and reducing government spending?
What will be an ideal response?
Given a market equilibrium point, explain, using the concepts of demand and supply, how it is achieved
What will be an ideal response?
Which of the following would not be considered an automatic stabilizer?
A. Defense spending B. Unemployment compensation C. Income tax D. Welfare payments