Macroeconomics with Connect Plus

Business

Quiz 15 :

Jobs and Unemployment

Quiz 15 :

Jobs and Unemployment

Question Type
search
arrow
What are the two ingredients that caused the stock market bubble in 1920 and early 2000s?
Free
Essay
Answer:

Answer:

Two key ingredients that caused the stock market bubble in 1920 and early 2000s are:
1. Herding
2. Leverage
Herding is the human tendency to follow the crowd. It happens when individuals follow other individuals' behavior due to some fear or greed.
Leverage is the use of financial instrument or borrowed capital to increase the potential return of an investment. It is used in the financial market to earn more from the borrowed money or funds.

Tags
Choose question tag
close menu
arrow
How can economists support a bailout package when they recognize that the bailout will create a moral hazard problem?
Free
Essay
Answer:

Answer:

Federal reserve, commonly known as fed is the central bank of country U. The responsibility of this institutions is to develop and implement monetary policy for the country. It regulates the money supply and manipulates the interest rates as well.
When fed performs open market operations then they sell or buy bonds in the open market. If fed buys the bonds then the money fed paid gets deposited in banks and then first ripple happens which is the change in amount of reserve with the banks. Next ripple would be that bank would like to dispose off their excess reserves and to do so they give more

Tags
Choose question tag
close menu
arrow
How do extrapolative expectations contribute to the shape of the demand curve in a market with a bubble?
Free
Essay
Answer:

Answer:

The extrapolative expectations refer to expectations that a trend will continue. Initially the market experiences a shock will lead to increase in price. This causes expectation of future price rise. This causes the demand curve to shift to right, which leads to further expectations and even expectations of multifold rise.
In the diagram, the initial equilibrium is at price P 0 where the quantity demanded and supplied is at Q 0. The demand curves shifts from D 0 to D 1 to D 2 as the expectations of price rise develops. Similarly, the prices rise from P 0 to P 1 to P 2. If the expectations are extrapolative, the people will expect that price rise will continue and demand curve shifts to right, which confirms that expectation. If we connect, the quantity demanded at each price it develops an effective upward sloping demand curve. In the diagram, the effective demand curve is labeled as bubble demand.

Tags
Choose question tag
close menu
arrow
How is the effect of leveraging on stock prices like the process of money creation?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
How did depositors'
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Why are policy makers more concerned about the financial market than other markets such as the automobile or computer markets?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
What is leveraging?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Why is trust important to the functioning of the economy?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
If you have a son whom you have forbidden to drink and drive, threatening to throw him out of the house, if he does actually drink and drive, do you throw him out of the house?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Post-Keynesians such as Hyman Minsky had been warning of a financial crisis such as the one we recently experienced for years. Why do you think they weren't listened to? (Post-Keynesian)
Essay
Answer:
Tags
Choose question tag
close menu
arrow
In what way might a recession or a depression actually make society better off? (Religious)
Essay
Answer:
Tags
Choose question tag
close menu
arrow
While there were economic "hiccups" between the Great Depression and the crisis of 2008, there were no major financial crises and reasonably steady economic growth for over six decades-the
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Who generally benefits from a bubble and who is usually most hurt when a bubble bursts? (Radical)
Essay
Answer:
Tags
Choose question tag
close menu
arrow
True or false? The 1929 stock market crash is the single cause of the Great Depression. Explain.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
How do mortgage-backed securities provide both diversification and liquidity?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
In what sense is the financial crisis a result of deregulation?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
How does leverage work in reverse to hasten the bursting of a bubble?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
To what extent are government interventions and the anticipation of such interventions responsible for the crisis of 2008? (Austrian)
Essay
Answer:
Tags
Choose question tag
close menu
arrow
What is the shape of the effective demand curve in a market with a bubble?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
What does it mean to securitize a
Essay
Answer:
Tags
Choose question tag
close menu
Showing 1 - 20 of 28