Need economic question answer

Jul 23rd, 2015
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1.  Which of the following contributed to the soaring housing prices of 2002-2005?

a. Regulations designed to make housing more affordable increased the demand for housing and drove housing prices upward.

b. Regulations designed to make housing more affordable decreased the number of sub-prime loans and made home buying a safer investment.

c. Mortgage lending standards tightened, and therefore mortgage loans for housing were only available to buyers purchasing highly expensive homes.

d. Home buyers were required to make larger down payments and this increased the demand for housing, driving housing prices up.

2.  Which of the following is true of regulation?

a. Regulatory agencies often ignore the secondary effects of their actions and fail to foresee future problems.

b. Policy-makers are hesitant to call for new regulations even when it is clear they would help avert future crises.

c. Mortgage lending and banking have historically been unregulated and therefore regulation in these sectors is unpopular.

d. Past regulations have been effective at averting crises, but they are unpopular because they reduce the profitability of the regulated industry.

3.  Inflation is

a. a persistent increase in the general level of prices.

b. a persistent increase in the price of an individual good, service or resource.

c. a one time increase in the general level of prices.

d. a one time increase in the price of an individual good or service.

4.  Money is

a. whatever is generally used to pay for goods, services and resources.

b. an object that is directly consumed.

c. widely used in a barter economy.

d. something that can be used to buy things but cannot be saved.

5.  Monetary and price instability will

a. make it easier for both individuals and businesses to plan wisely for the future.

b. generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment.

c. encourage businesses to invest and expand their future output.

d. encourage domestic citizens to increase their rate of saving.

6.  Which of the following will discourage investment?

a. well-defined property rights

b. high and variable rates of inflation

c. a low and steady rate of inflation

d. low tax rates

7.  The Fed’s low short-term interest rate policy of 2002 to 2004 encouraged decision makers to

a. make large down payments when purchasing housing.

b. purchase housing only if it could be financed with a 30-year, fixed interest-rate mortgage.

c. borrow more and increase their purchases of housing.

d. borrow less and reduce their purchases of housing.

8.  Which of the following is true of taxes?

a. Taxes drive a wedge between what buyers pay and what sellers receive.

b. Taxes increase the volume of mutually advantageous exchanges.

c. Increases in taxes are the primary cause of inflation.

d. Business taxes generate government revenue without imposing a burden on consumers and households.

9.  Why do foreigners export goods and services to buyers in the United States?

a. They want to acquire dollars so they can purchase things from Americans.

b. They like helping Americans.

c. They are forced to sell to Americans.

d. They want to harm Americans and one way of doing so is to sell goods at low prices in the U.S. market.

10.Trade restrictions like tariffs and quotas will

a. protect American jobs and increase employment.

b. ensure that more dollars stay in the United States.

c. reduce the value of goods and services that we will be able to produce and consume.

d. make all Americans better off.

11.Which of the following resulted from the Smoot-Hawley trade bill of 1930?

a. The stock market began a steady recovery from the crash of October 1929.

b. Many countries responded by imposing higher tariffs on American products, and the volume of international trade fell sharply.

c. Imports decreased, while exports increased, resulting in an overall increase in GDP and tariff revenues.

d. The unemployment rate, which had been rising, began to steadily decline as jobs were protected by the trade restrictions.

12.In order to achieve a high economic freedom rating, a country must

a. elect political officials democratically.

b. protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services.

c. provide citizens with housing, health care, and other basic goods free of charge.

d. use the taxing power of the state to redistribute income from the rich to the poor and thereby promote income equality.

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(Top Tutor) Daniel C.
School: University of Virginia

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