When investors become irrationally optimistic that an asset's price will continue to rise, it causes a financial bubble to:
A. start to inflate.
B. be on the verge of bursting.
C. burst.
D. become doubted by most serious investors.
A. start to inflate.
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The quantity of loanable funds demanded increases if the real interest rate falls, all other things remaining the same, because the real interest rate
A) is the opportunity cost of investment. B) is not related to the price of bonds and stocks. C) affects the supply of saving which, in turn, determines the quantity of investment. D) affects the quantity of saving supplied. E) determines the cost of living.
The demand for nominal money
A) increases as the price level increases. B) decreases as the price level increases. C) depends on the quantity of money. D) is the same as the demand for real money.
Crowding out refers to the government's increased demand for credit, which:
a. displaces some private sector consumption by decreasing the price level. b. displaces some private sector borrowing by decreasing the interest rate. c. displaces some private sector borrowing by increasing the interest rate. d. hires labor away from the private sector e. displaces some import purchases by the private sector.
One problem with hiring the services of a neighbor's wife for household cleaning is that Gross National Product does not change
Indicate whether the statement is true or false