When the credit spread rises, an effective policy response might be to ________
A) lower the real interest rate on safe assets
B) prevent the real federal funds rate from falling below zero
C) pursue nonconventional monetary policies to restore the functioning of financial markets
D) announce swift and stern action against those responsible for the financial disruption
C
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If crowding out occurs, the Main Burden of the debt is
a. smaller government assets passed along to the next generation. b. smaller capital stock passed along to the next generation. c. fewer government services during this generation. d. higher debt payments passed along to the next generation.
The price of the typical cell phone has been going down in the past 10 years. What could explain this consistent drop in the price of these phones? Use the model for the long-run competitive firm to illustrate your answer (hint: you need two diagrams here: one showing the LAC for the typical firm, and another showing the long-run supply curve for the industry).One explanation is that the market for cell phones is a pecuniary economy, due to economies of scale. If that is the case, the diagram to represent the LAC for this market is given below.
What will be an ideal response?