Which of the Following Is a Major Difference Between the Japanese

question 21

Multiple Choice

Which of the following is a major difference between the Japanese experience of the 1990s and the U.S.in 2008-2009?

• A)The U.S.saving rate is much lower than that of Japan during the 1990s.
• B)The labor force of the U.S.is getting younger,while the labor force of Japan was aging.
• C)The U.S.responded to its downturn with considerable stimulus spending,while Japan failed to significantly increase government spending.
• D)In the U.S.the recession was the result of a severe downturn in real estate prices,while in Japan,a lengthy recession eventually led to a downturn in real estate prices.

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Definitions:

Zero-coupon Bond

A bond that does not pay periodic interest and is sold at a discount to its face value, with the full face value repaid at maturity.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.

Forward Interest Rate

Rate of interest for a future period that would equate the total return of a long-term bond with that of a strategy of rolling over shorter-term bonds.

Yield Curve

A graph that plots the interest rates at a set point in time of bonds having equal credit quality but differing maturity dates, typically used to predict economic changes.