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Scenario 1 In 2007-09, the U.S. economy went through its worst economic downturn in 30 years. As a consequence of the sharp increase in the price of housing in the U.S. in the mid-2000s, a rapid increase in the demand for oil drove up oil prices. Additionally, the collapse of the housing market, which led to Lehman Brothers’ bankruptcy, generated a financial crisis that reduced private spending.   Refer to scenario 1 and question 68. In February 2009, the Congress approved the American Recovery and Reinvestment Act (ARRA) put forward by President Obama, consisting of US$ 787 billion in fiscal stimulus. Starting from the equilibrium at point B, how did the ARRA affect the economy?

Other things the same, a decrease in velocity means that

Figure 2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. Refer to figure 2. Which of the following events could explain a shift of the money-supply curve from MS2 to MS1?

Figure 1   Refer to figure 1. Which of the following events could explain a shift of the demand for loanable funds curve from D1 to D2 ?

If the marginal propensity to consume is 0.85, then the fiscal multiplier is

The Fisher effect

When prices are falling, it is said that the economy is experiencing

In a fractional reserve banking system, if the public decides to hold less currency and more deposits in banks, bank reserves

Name the layer in the blue bracket:

A firm has bonds with 20 years to maturity, paying a $65 annual coupon, face value of $1000, and current price of $986. If the firm’s tax rate is 21%, what is the firm’s after-tax (aka “effective”) cost of debt? (Express your answer as a percentage to two decimal places, 12.34 percent would be 12.34, for example.)