Question

1) A decrease in the price of oil will cause the: short-run aggregate supply curve to...

1) A decrease in the price of oil will cause the:

  • short-run aggregate supply curve to shift to the left.

  • aggregate demand curve to shift to the right.

  • long-run aggregate supply curve to shift to the left.

  • short-run aggregate supply curve to shift to the right.

2) The discount rate is typically:

  • higher than federal funds rate.

  • about the same as federal funds rate.

  • determined by the government, and does not correlate with other interest rates.

  • lower than federal funds rate.

3)

One reason the housing bubble occurred is because the:

  • securitization of mortgages meant more mortgages were low-risk, attracting investors.

  • herd instinct caused everyone to stop buying homes.

  • All of these statements are true.

  • recency effect affected people's perceptions of home values.

4 The risk of a borrower defaulting on a loan is known as:

  • default risk.

  • asset risk.

  • credit risk.

  • loan risk.

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Answer #1

Q1) Answer) short-run aggregate supply curve to shift to the right

Since oil is an input , a decrease in input price will cause more to be produced at same cost, this will shift short run aggregate supply curve

Q2) Answer) higher than federal funds rate.

The discount rate which is decided by the fed is usally kept higher than the fed funds rate

Q3) Answer) recency effect affected people's perceptions of home values.

Recency effect is a psychological effect which makes people remember the latest information. So in housing bubble people remembered the rising prices which affected their perceptions and cause a housing bubble to rise.

Q4) Answer ) Defalut risk

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