Deleveraging is the process of reducing leverage, and therefore reducing the risk to capital from any further declines in asset prices
a. True
b. False.
A
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While many analysts defended the actions taken by the Fed and the Treasury to respond to the financial crisis in 2008, others were critical of these actions. The critics were concerned that by not allowing large firms to fail
A) stockholders and bondholders of these firms were not allowed to receive the proceeds from the sale of assets that would have occurred if the firms had declared bankruptcy. B) there is an increased likelihood that other firms will engage in risky behavior in the future with the expectation that they will also not be allowed to fail. C) there will be less competition in the U.S. economy, which could led to higher prices for consumers. D) smaller firms will resent not receiving similar assistance.
Refer to the above figure. If the government imposes a price floor of $20
A) the quantity traded will be 150, and the price will be $20. B) the quantity traded will be 100, and the price will be $20. C) the quantity traded will be 200, and the price will be $20. D) none of the above.
Why does a change in GDP affect unit costs and the price level?
a. as GDP increases, productivity increases. b. as GDP increases the price of non-labor inputs increases and the nominal wage tends to increase. c. as GDP decreases, there are efficient gains d. as GDP increases, economies of scale allow for lower unit costs. e. as GDP increases the price of non-labor inputs decreases and the nominal wage tends to increase.
If the aggregate demand curve shifts in the short run moving the economy out of long-run equilibrium:
A. the short-run aggregate supply curve will shift to bring it back into long-run equilibrium. B. inflation will always occur. C. the aggregate demand curve will eventually shift back once expectations are taken into account. D. we will move along the short-run aggregate supply curve back to equilibrium.