What was the original stated purpose of Fannie Mae and Freddie Mac?
a. to allow the government to extend loans directly to low-income and minority households
b. to help provide liquidity in the secondary mortgage markets
c. to operate as non-profit entities that would provide competition for for-profit mortgage companies
d. to take on mortgages going into default in order to prevent them from going into foreclosure
B
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Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause
A) an increase in the demand for coffee. B) a decrease in the demand for coffee. C) a leftward shift of the demand curve for tea. D) a leftward shift in the demand for coffee.
Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.80 . An increase in government spending of $1 billion would result in an increase in GDP of:
a. $0. b. $0.8 billion. c. $1.0 billion. d. $5.0 billion. e. $8.0 billion.