A financial crisis may develop into a vicious cycle due to:
a. a recession that worsens banking problems.
b. increased net capital inflows due to the crisis.
c. exchange rate depreciation that increases output.
d. banks becoming more liberal in granting loans.
Ans: a. a recession that worsens banking problems.
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According to Okun's Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $15 trillion, then actual real GDP is
A) $14.7 trillion. B) $15.4 trillion. C) $15.0 trillion. D) $12.0 trillion. E) $15.3 trillion.
The long-run equilibrium in a monopolistically competitive market is similar to the long-run equilibrium in a perfectly competitive market in that in both markets, firms
A) produce at the minimum point of their average total cost curves. B) produce where price equals marginal cost. C) break even. D) produce where price equals marginal revenue.