The growth of the subprime mortgage market led to
A) increased demand for houses and helped fuel the boom in housing prices.
B) a decline in the housing industry because of higher default risk.
C) a decrease in home ownership as investors chose other assets over housing.
D) decreased demand for houses as the less credit-worthy borrowers could not obtain residential mortgages.
A
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Suppose that demand is perfectly inelastic. Supply is normal and upward sloping. What is the economic incidence of a unit tax placed on suppliers? Illustrate this with an appropriate diagram.
What will be an ideal response?
With specialization
A) opportunity costs tend to be constant. B) there are greater gains in material well being. C) there is more emphasis on self-reliance. D) society is more productive while individuals are less productive.
A kinked demand curve
a. results from the heavy advertising expense required. b. occurs because, when one seller lowers the price, no one else will do so. c. is a basic characteristic of monopolistic competition markets. d. tends to be inelastic for price decreases and elastic for price increases.
Suppose Will gives his wallet containing $100 to Alex to hold while he works out. During Will's workout, Alex uses the $100 to pay his mechanic who fixed his scooter. The mechanic then took this $100 to his vet to pay off his account for rescuing his pet bird. The vet then used the $100 to pay Alex for money she owed him for tutoring her in economics. After Will's workout, Alex returns the wallet with the same $100 bill inside. Although the same $100 bill was used without Will's knowledge, everybody's debt has been settled. How much money was created?
a) $0 b) $100 c) $200 d) $300