The economy recovers quickly from most recessions, but the increase in adverse selection and moral hazard problems in the credit markets caused by ________ led to the severe economic contraction known as The Great Depression
A) debt deflation
B) illiquidity
C) an improvement in banks' balance sheets
D) increases in bond prices
A
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What three real-world complications keep purchasing power parity from being a complete explanation of exchange rate fluctuations in the long run? Explain
What will be an ideal response?
In the United States, the idea that the federal government should undertake actions to stabilize business activity
A) was established in the Declaration of Independence. B) is a relatively new idea that developed in the years during and after the Great Depression. C) has been around since the early 1700s. D) developed during World War I.
According to utilitarians, the ultimate objective of public actions should be to
a. ensure the poor can afford an adequate diet. b. distribute income uniformly. c. maximize the sum of individual utility. d. prevent all people from experiencing diminishing marginal utility.
Which of the following statements is consistent with a given (i.e., fixed) LM curve?
A) A reduction in the interest rate causes investment spending to increase. B) A reduction in the interest rate causes money demand to decrease. C) A reduction in the interest rate causes an increase in the money supply. D) An increase in output causes an increase in demand for goods. E) An increase in output causes an increase in money demand.