In the calm before the storm of the early 1990s recession, the economy was fueled by many factors including debt-financed purchases by some firms of all the stock or assets of other firms. These purchases were known as
a. hostile takeovers
b. junk bonds
c. leveraged buyouts
d. stock swaps
e. derivatives
C
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Assume a money multiplier of 3. If the Treasury finances a $30 million expenditure by selling securities to the Fed, the money supply could ultimately
A) rise by $3 million. B) rise by $10 million. C) rise by $30 million. D) rise by $90 million.
Consumer expectations and a positive business sentiment would boost
A. investment through aggregate supply. B. investment through aggregate demand. C. government spending. D. investment through aggregate demand and aggregate supply.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.
Suppose that the price of telephones decreases. If more are purchased then:
A. the total utility of telephones will decrease. B. the total utility of telephones will be unchanged. C. the marginal utility of telephones will likely increase. D. the marginal utility of telephones will likely decrease.