Question

9. All of the following describe Classical/Neoclassical philosophy except

Temporary mismatch can occur in specific markets for goods and services.

Wage flexibility will take care of the surplus/excess supply/unemployment in the labor market.

Demand creates Supply

Laissez faire or markets are most efficient when left alone

11. All of the following are determined by Prime Lending rate except

Car loan rates

Credit card rates

30 year mortgage loan

Home equity line of credit

12. Only one of the following events is a cause of Great Depression

FDR Public works project

Real Estate Market crash.

Decline in International trade.

Credit Cards usage

Answer 1

9) c) Demand creates Supply. This did not describe the classical/neoclassical philosophy. They believed that supply can create demand.

11) a) car loan rate. Prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to the favored customer. The car loan rate is generally the same for all the customers.

12) c) Decline in international trade. Countries imposed tariffs and there was a decline in international trade which was the cause of widespread great depression.