Based on what we know about asset price formation, what steps can a government use to restrict the formation of an asset price bubble?
A) Lower interest rates in order to discourage savings and investment
B) Loosen lending requirements for banks, which encourages investors to buy bank stock rather than the "bubbling" asset
C) Increase the money supply
D) Raise interest rates in order to increase the costs of financing asset purchases
D
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
The real interest rate can be expressed as the:
a. nominal interest rate minus the real interest rate. b. inflation rate minus the nominal interest rate. c. nominal interest rate minus the inflation rate. d. nominal interest rate plus the inflation rate.
A patent is a government protection that gives
A. companies the right to produce any good they choose. B. monopolies the right to be sole producers due to economies of scale. C. consumers the right to sue when products are unsafe. D. inventors exclusive rights to their product for a time.
In perfect competition, price is greater than marginal revenue while in monopoly price is less than marginal revenue.
Answer the following statement true (T) or false (F)