Exploring Economics
Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
Question
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Chapter 21, Problem 11P
To determine

To explain:

If housing prices had continued to rise during the 2008 financial crises if we can still have had the same problem with subprime borrowers or it would just have been delayed.

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What is the sequence of events from a rise in the federal funds rate target range to a change in the inflation rate? Other short-term interest rates _______.     A. and the long-term interest rate rise the same day   B. rise the same day, but it takes a few months for the supply of loanable funds to decrease   C. rise within a few weeks, but the long-run interest rate rises almost immediately   D. rise the same day, but it takes a few months for the supply of loanable funds to increase
Should governments pay off their debts and not be allowed to borrow any more except under special extreme circumstances (like the current pandemic or if they were at war)? Explain the reasons for your answer clearly.
Explain how government borrowing affect interest rate in the market. What impact such change in interest rate could have on the economy?
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