The circular flow model shows that consumer goods and services produced by business firms are sold in the

An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the two goods, X and Y, is it possible for the economy to produce?

A) 700 units of X and 280 units of Y B) 600 units of X and 250 units of Y C) 400 units of X and 150 units of Y D) 100 units of X and 600 units of Y E) 300 units of X and 280 units of Y

One reason the housing bubble occurred is because:

A. the recency effect caused homes to typically be undervalued. B. securitization removed much of the risk from the sellers of subprime mortgages. C. the herd instinct caused everyone to believe home prices would continue to fall. D. All of these statements are true.