The major reason tight money fell so heavily on housing in the past was that
A) people didn't like to borrow when interest rates were high.
B) the reserve requirements on deposits at saving and loan institutions were higher than those for commercial banks.
C) the lag effect of tight money on housing was long and variable.
D) there were legal ceilings on the interest rates that saving and loan institutions could pay on their deposits.
D
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Refer to Figure 10-2. When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones. This change in quantity demanded is due to
A) the fact that marginal willingness to pay falls. B) the price and output effects. C) the law of diminishing marginal utility. D) the income and substitution effects.
If prices in the United States fall relative to Japan, then the:
a. Dollar depreciates because U.S. imports from Japan fall, and U.S. exports to Japan rise. b. Yen depreciates because U.S. imports from Japan fall, and U.S. exports to Japan rise. c. Yen depreciates because U.S. imports from Japan fall, and U.S. exports to Japan fall. d. Yen depreciates because U.S. imports from Japan rise, and U.S. exports to Japan fall. e. Change in the value of the dollar or yen is uncertain because exports and imports rise.
Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,
a. the demand for treadmills will increase. b. the supply of treadmills will decrease. c. a shortage of treadmills will develop. d. All of the above are correct.
A fundamental aspect of economics is to
A) ensure that every firm makes a profit. B) analyze how choices are made. C) satisfy all our wants. D) make sure that our resources will always be unlimited.