Why do mortgage companies begin to require larger down payments from their borrowers when housing prices begin to fall?
What will be an ideal response?
The primary risk that a mortgage company makes when it loans money on a house is default on the part of the borrower. Even though the house is typically the largest part of the collateral of the loan the mortgage company could stand to lose a significant amount of money if it had to sell the repossessed home in a declining market. Making borrowers put up a larger down payment helps make up for the deficiency in the value of the collateral.
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The ability-to-pay principle claims that a person should pay taxes according to
a. the level of public education that the person has received throughout his lifetime. b. how many government services that person will receive. c. how well that person can shoulder the tax burden. d. the level of debt that the person has.
When the Barro model assumes lump-sum taxes, this means
a. real taxes are independent of a household's income. b. nominal taxes depend negatively on a household's consumption. c. nominal taxes depend positively on a household's income. d. there is no tax on inheritances.
The above table gives the demand and supply schedules for cat food. If the supply increases by 20 tons at every price, what is the new equilibrium price and quantity?
What will be an ideal response?
The determinants of labor supply include:
A. culture and other opportunities. B. supply of other factors and output prices. C. culture and technology. D. other opportunities and technology.