Questions from Macroeconomics


Q: What are the two types of asset-price bubbles? Which

What are the two types of asset-price bubbles? Which type poses a bigger threat to the financial system? Why?

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Q: Suppose the U.S. Congress is forced to increase taxes

Suppose the U.S. Congress is forced to increase taxes to pay for the cost of health care reform in the United States. Describe the effects of such a policy, according to the three business cycle model...

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Q: Why is a financial crisis likely to lead to a contraction in

Why is a financial crisis likely to lead to a contraction in economic activity?

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Q: Describe the three factors that commonly initiate financial crises, and explain

Describe the three factors that commonly initiate financial crises, and explain how each one contributes to a crisis.

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Q: What causes bank panics and why do they worsen financial crises?

What causes bank panics and why do they worsen financial crises?

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Q: Why does debt deflation make financial crises worse?

Why does debt deflation make financial crises worse?

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Q: How did financial innovations in mortgage markets contribute to the 2007–

How did financial innovations in mortgage markets contribute to the 2007–2009 financial crisis?

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Q: What principal-agent problems resulted from the originate-to-

What principal-agent problems resulted from the originate-to-distribute mortgage lending model?

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Q: Identify changes in three factors that will shift the aggregate demand curve

Identify changes in three factors that will shift the aggregate demand curve to the right and changes in three different factors that will shift the aggregate demand curve to the left.

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Q: What prevented the financial crisis of 2007– 2009 from becoming a

What prevented the financial crisis of 2007– 2009 from becoming a depression?

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