An economy without monetary exchange is called A) a primitive economy. B) a barter economy. C) a socialist economy. D) an autarky economy. ANSWER B
Date: September 10th, 2020
What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected? What will be an ideal response? ANSWER A financial crisis affects short-run aggregate supply by first affecting aggregate demand. The decline in economic activity that results from disruption of credit markets causes output to fall […]
Date: September 10th, 2020
How is a financial crisis like a power blackout? What will be an ideal response? ANSWER A blackout occurs when a breakdown at one or more points in the power grid causes strain at other points. As these fail, the entire system can collapse. The failure of a single financial institution disrupts the functioning […]
Date: September 10th, 2020
If the proportion of bad borrowers increases, A) the lending interest rate increases. B) the lending interest rate decreases. C) the borrowing interest rate increases. D) the borrowing interest rate decreases. ANSWER C
Date: September 10th, 2020
If money is superneutral, A) a one-time change in the money supply has no real impact. B) a one-time change in the money supply has a real impact. C) a change in the money growth rate has no real impact. D) a change in the money growth rate has a real impact. ANSWER C
Date: September 10th, 2020
The real wage denotes A) the number of units of consumption goods that can be exchanged for one unit of labor time. B) the number of units of labor time that can be exchanged for one unit of consumption goods. C) the number of units of labor time that can be exchanged for one unit […]
Date: September 10th, 2020
Collateralizable wealth is A) wealth in non-tangible assets. B) any asset that can be used to obtain a loan. C) wealth that increases and income increases. D) wealth based on mortgage lending. ANSWER B
Date: September 10th, 2020
The representative consumer acts competitively A) when he or she can haggle for a lower price. B) when he or she is a price-taker. C) when he or she is a price-maker. D) if the consumer is large relative to the size of the market. ANSWER B
Date: September 10th, 2020
An increase in asymmetric information that increases financial frictions will tend to ________. A) increase the moral hazard and adverse selection problems in credit markets B) decrease financial frictions C) improve market efficiency D) decrease the moral hazard problem ANSWER A
Date: September 10th, 2020
When there are credit market frictions, Ricardian equivalence may not hold because A) consumers cannot understand the implications of the government budget constraint. B) a tax cut in the present with a future increase in taxes works effectively like a loan. C) an increase in government saving is matched one-for-one by a decrease in private […]
Date: September 10th, 2020
