In November 2012, concern was raised about Spain's sovereign debt. Make use of a graph of the bond market to show how this would affect the price of Spanish bonds
What will be an ideal response?
Fear about the ability of Spain to make payments on its bonds will reduce the demand for Spanish bonds, leading to a decline in the price of Spanish bonds.
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Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
A) Demand is likely to be perfectly elastic. B) Demand is likely to be relatively elastic. C) Demand is likely to be relatively inelastic. D) Demand is likely to be perfectly inelastic.
Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied
a. True b. False Indicate whether the statement is true or false
A major cause of the Great Recession was:
a. The liberalization of U.S. banking regulations that led to excessive risk taking. b.Excessive foreign exchange speculation. c. Contractionary fiscal policies. d. Excessive money creation by the Federal Reserve immediately before and during the downturn. e. None of the above.
According to the concept of the liquidity trap,
A. at very low interest rates people would put their money in the bank. B. at very low interest rates people would simply hold their money. C. at very high interest rates people would simply hold their money. D. people will lend out their money no matter what the interest rate happens to be.