The failure of a major financial company is often a trigger for a financial crisis. The main reason for trouble at a single firm to become a crisis for the entire economy is that ________
A) the central bank will suspend operations until the failed firm is restructured
B) it is unclear whether the firm's collapse will remain an isolated event
C) customers of the failed company will organize a boycott to protest their losses
D) employees and owners of the failed company reduce their spending, with adverse effects on other businesses
B
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A business cycle peak is a
A) small positive deviation from trend in real GDP. B) relatively large positive deviation from trend in real GDP. C) small negative deviation from trend in real GDP. D) relatively large negative deviation from trend in real GDP.
In a negative income tax program,
a. the government guarantees a minimum level of family income b. a family must pay income taxes on its welfare check c. a family receives a fixed amount of money from the government and its members can keep all income earned through work d. the government reduces the welfare payment by any income earned through work e. a family's income is lower if its members work