The repurchase agreement market dried up during the Great Recession because:
a. Counterparty risk increased, which caused normal lending channels to fail and lines of business to shrink.
b.The collateral backing these agreements fell in value, causing large massive calls for additional collateral.
c. Many participants were uncertain about the value of the securities backing these agreements.
d. All of the above.
Question 2 - If the price of inputs rises and foreign income rises:
a. Price index falls, and real GDP rises.
b. Price index falls, and real GDP falls.
c. Price index falls, and the change in real GDP is uncertain.
d. Price index rises, and the change in real GDP is uncertain.
e. The change in price index is uncertain, and real GDP falls.
Question 3 - The repurchase agreement market was an important ingredient of the Great Recession because:
a. It is the market on which mortgages are repurchased, and, due to the Great Recession, this market dried up.
b. It is the market on which many companies finance their daily working capital needs and, due to the Great Recession, this market dried up.
c. Many repurchase agreements were with subprime mortgages, and few investors would purchase them.
d. All of the above.
Question 4 - If the price of inputs rises and foreign income rises:
a. Price index rises, and the change in real GDP is uncertain.
b. Price index falls, and real GDP rises.
c. Price index falls, and real GDP falls.
d. Price index falls, and the change in real GDP is uncertain.
e. The change in price index is uncertain, and real GDP rises.
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