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.
Answer: B
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A decrease in the budget deficit causes domestic interest rates
a. and investment to rise. b. to rise and investment to fall. c. to fall and investment to rise. d. and investment to fall.
Third-degree price discrimination is more common in service industries because ________.
A. all firms in these industries have significant monopoly power over price B. low price buyers will find it virtually impossible to resell the products of such industries to high price buyers C. the costs of providing such industries' products to different groups of buyers vary dramatically D. the price elasticity of demand is the same for all groups of buyers in these industries