Explain the causes of the U.S. Savings and Loans crisis of the early 1980s
What will be an ideal response?
On the one hand, allowing S&L to make much riskier loans, for example, loans on commercial real estate. On the other hand, inadequate examination for the new situation and depositors, together with increase in interest rate due to increased inflation rate.
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The figure above shows the loanable funds market. If the real interest rate is 2 percent, then
A) there is a surplus in the loanable funds market. B) there will be a leftward shift in the demand for loanable funds curve. C) there will be government intervention in the market to make sure there is no credit crisis. D) there is a shortage in the loanable funds market E) the demand for loanable funds curve will shift rightward.
Which of the following is not "crowded out" by higher interest rates as a result of expansionary fiscal policy?
A) net exports B) private investment C) consumption D) government spending
According to Ricardian equivalence, the key consequence of an increase in the budget deficit that arises from a tax cut is ________
A) a decrease in private investment B) an increase in inflation C) an increase in the public's holding of government bonds D) an increase in the supply of money
One major fault with factor pricing analysis is that marginal productivity theory merely attempts to justify the income distribution that the capitalist system yields
a. True b. False Indicate whether the statement is true or false