In the 1950s, a traditional, thirty-year fixed-rate mortgage would typically have been
A. available to the borrower without a down payment and without documentation of income.
B. securitized and sold to a consortium of foreign investors.
C. held by the original lender or banker until it was paid off.
D. all of the options are correct.
Answer: C
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The rational expectations school advocates the passive rule of a fixed-growth rate monetary policy because:
a. policy makers often do not have enough information to pursue an active policy b. active intervention is required only if an economy is in recession. c. a large bureaucracy can be eliminated by following the passive approach. d. people render active policy ineffective by figuring out what it's going to be and taking actions to offset it. e. they prefer to emphasize on an active fiscal policy.
Which of the following is NOT an assumption of the classical system?
A. There is no money illusion. B. People are motivated by self interest. C. Pure competition exists. D. Wages and prices are inflexible.