When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease.
B. prices, causing them to definitely rise.
C. output, causing it to definitely increase.
D. prices, causing them to definitely fall.
Answer: A
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When steady state capital per worker is above the golden-rule level, we know with certainty that an increase in the saving rate will
A) increase consumption in both the short run and the long run. B) decrease consumption in both the short run and the long run. C) decrease consumption in the short run, and increase it in the long run. D) increase consumption in the short run, and decrease it in the long run. E) none of the above
The imposition of price ceilings on a market often results in
a. an increase in investment in the industry. b. a persistent surplus in the market. c. the diversion of income toward black-market suppliers. d. lower prices being offered on the black market.