During the Expansion Phase of the Business Cycle,households Become Optimistic

question 141

Multiple Choice

During the expansion phase of the business cycle,households become optimistic about their future earning capacity as do banks.Nominal interest rates rise during expansions.Mortgage lending could be expected to

• A)rise if the change in future earnings is thought to be greater than the change in interest rates.
• B)stay the same.
• C)fall.
• D)fall if the change in future earnings is thought to be greater than the change in interest rates.

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Definitions:

Unit Price

The cost assigned to a single unit of a product or service, making it easier to compare the value of similar products or services.

Total Cost

The complete cost of production, including both fixed and variable costs incurred in the creation of a good or service.

Purely Competitive Firm

A business operating in a market where there are many buyers and sellers, each with negligible impact on the price of goods and services.

Economic Profit

The variance between collective earnings and complete expenditures, encompassing both overt and covert costs.