Teaser interest rates refer to
A) the initial rates that are typically below market rate and are offered by lenders to entice the clients to borrow.
B) mortgage rates.
C) rates charged on all subprime mortgages.
D) none of the above.
A
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Lower interest rates cause the velocity of M1 to
A) turn negative. B) move erratically. C) increase. D) decline.
If the actual price level exceeds the expected price level reflected in long-term contracts,
a. many firms will find production more profitable than they had expected and will increase the quantity of output supplied. b. many firms will find production less profitable than they had expected and will decrease the quantity of output supplied. c. many firms will find production more profitable than they had expected and will decrease the quantity of output supplied. d. many firms will find production less profitable than they had expected and will increase the quantity of output supplied.
You live in a world where the marginal rate of substitution of food for clothing is two and the price ratio between food and clothing is one. Your world also has labor and capital that has marginal products respectively of two and five. The price of capital is ten and the price of labor is 8. Finally, your world can transform two units of food into one unit of clothing or vice versa. Assuming that all the conditions of general equilibrium are present, what will happen in the various sectors of the economy to bring about general equilibrium?
What will be an ideal response?
While trade restrictions for a small country do provide gains to certain segments in the economy, in a second-best world such restrictions will always lower national welfare for a small country.
Answer the following statement true (T) or false (F)