In Contrast to the Dot-Com Stock Market Bubble, the Bursting

question 10

Multiple Choice

In contrast to the dot-com stock market bubble, the bursting of the housing bubble ________, implying ________.

• A) affected almost every financial institution; the risk was well diversified
• B) affected a small number of investors; the risk was not well diversified
• C) hurt every household; households paid too high an interest rate
• D) was attenuated by a quick response by the Fed; the Fed's policy was effective
• E) increased household expenditures; it had little effect on the macroeconomy

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Definitions:

National Defense

Government and military activities and structures designed to protect a country against threats and maintain its sovereignty.

Basic Research

The fundamental investigation into the principles and reasons behind observable phenomena, without targeted applications.

Types of Goods

Classification of goods based on characteristics such as excludability, rivalry in consumption, and whether they are public, private, common, or club goods.

Negative Externalities

Costs suffered by a third party due to an economic activity, where those involved in the activity do not fully bear the cost.