What other markets were affected by the decline in the housing market beginning in 2006? Briefly explain why
What will be an ideal response?
Other markets affected included furniture, appliances, and home improvement. One reason that they were affected was that homeowners found it more difficult to borrow against the value of their homes.
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Suppose you were a forecaster of the real wage rate, employment, output, the real interest rate, consumption, investment, and the price level. A shock hits the economy, which you think is a temporary adverse supply shock
(a) What are your forecasts for each of the variables listed above (rise, fall, and no change)? (b) What if the shock was really due to people's reduced expectations about their future income. Which variables did you forecast correctly, and which did you forecast incorrectly?
To an economist, the term "needs"
A) means the purchase of necessary goods. B) is objectively undefinable. C) identifies the purchases of basic goods and services. D) refers to the purchase of goods by the poor.
If the prices of energy products rise sharply, consumers will most likely
a. sharply reduce their consumption of these products in both the short run and the long run. b. reduce their consumption of these products slightly in the short run and more sharply in the long run. c. reduce their consumption of these products sharply in the short run, but in the long run consumption will fall by only a small amount. d. increase their consumption of these products slightly in the short run and more sharply in the long run.
If an industry exhibits economies of scale, one larger firm may be able to produce goods at a lower long-run average cost than two smaller firms
a. True b. False Indicate whether the statement is true or false