Based on what we know about asset price formation, what steps can a government use to restrict the formation of an asset price bubble?
A) Lower interest rates in order to discourage savings and investment
B) Loosen lending requirements for banks, which encourages investors to buy bank stock rather than the "bubbling" asset
C) Increase the money supply
D) Raise interest rates in order to increase the costs of financing asset purchases
D
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Which of the following statements about transfer payments is true?
a. Transfer payments are not included in total government expenditures. b. Transfer payments involve the international remittance of funds. c. Transfer payments refer to the transfer of money by the commercial banks to the people. d. Transfer payments are made by the government to taxpayers. e. Transfer payments are made when governments purchase goods and services.
Suppose that if the price of plane tickets increased, more people would choose to travel by train. If this happened, you would know that:
A. the cross-price elasticity between plane tickets and train tickets is negative. B. plane tickets are an inferior good. C. the cross-price elasticity between plane tickets and train tickets is positive. D. plane tickets and train tickets are complements.