The Fed's actions leading up to the Great Recession:
A. may have contributed to the housing bubble and made the recession worse.
B. may have mitigated the housing bubble and stopped the recession from having been worse.
C. may have contributed to falling consumer confidence and made the recession worse.
D. may have helped to boost consumer confidence and stopped the recession from having been worse.
Ans: A. may have contributed to the housing bubble and made the recession worse.
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In the traditional Keynesian model, an increase in government spending
A) causes the C + I + G + X line to shift upward by the full amount of the increase in government spending. B) causes the C + I + G + X line to shift upward by an amount less than the increase in government spending. C) causes the C + I + G + X line to shift upward by more than the increase in government spending. D) causes no change in the C + I + G + X line.
Being the low price seller in the market is
A) the best place to be. B) not necessarily the best place to be. C) expected of large firms as they are subject to economies of scale. D) not as preferred as being the high price seller in the market.
Which of the following is the term used when average costs go down as the measure of output goes up?
a. Relative advantage b. Absolute advantage c. Comparative advantage d. Economies of scale
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactionsin the context of the Three-Sector-Model?
a. The GDP Price Index rises, and current international transactionsbecomes more negative (or less positive). b. The GDP Price Index and current international transactionsremain the same. c. The GDP Price Index falls, and current international transactionsremains the same. d. The GDP Price Index falls, and current international transactionsrises. e. There is not enough information to determine what happens to these two macroeconomic variables.