Exam 14: Financial Crises, Stabilization, and Deficits

Between the second quarter of 2006 and the first quarter of 2009, the value of housing wealth

If the United States continues to run large structural deficits year after year, the government will have to

A negative demand shock increases consumer and investment spending and tends to increase the budget deficit.

The economic impact of ________ during inflationary periods is to moderate upward pressure on price levels.

If the U.S. Treasury is forced to sell bills and bonds to the U.S. public to finance deficits, this may ________ the price of bonds and ________ the interest rates on the bonds.

If interest rates are positive, one dollar today is worth

From ________ the stock market as measured by the S&P 500 index had a record boom.

A person who strongly wishes to avoid risk would pick which of the following choices?

The Dow-Jones Industrial Average index is the broadest U.S. stock market index.

Stock holders are classified as the ________ of a company.

During the financial crisis of 2008-2009, the U.S. government bailed out Lehman Brothers.

When there is a stock market crash

A stock market boom leads to greater investment by firms.

Other things equal, high interest rates ________ the government deficit because of ________ government interest payments.

A bond is an asset of the holder.

When there is a stock market boom

If the risk associated with a company goes down, you would expect the price of its stock to

The economic impact of automatic stabilizers during recessionary periods is to

An example of automatic stabilizers is

If you think the price of a share of stock ________, but you buy it anyway because you expect to be able to sell it later at a higher price, then you are participating in a stock market price bubble.