Reference no: EM133392548

Questions

1. In Chapter 3 or Unit 3, what term below uses a "market basket" of consumer goods?

A) GDP

B) CPI

C) BEA

D) NASDAQ

2. Assume a buyer likes a home priced at $1,000,000 and agrees to buy it. Then they put $200,000 as a downpayment. What is the LTV in this situation?

A) 20 percent

B) 80 percent

C) $200,000

D) $800,000

3. Suppose a homeowner has a house that declined in value from $2,000,000 to $300,000.

They had the bad luck of living next to a nuclear power plant that suffered a meltdown. The entire area will have higher-than-normal radiation for the next 20 years. The bank that holds the first mortgage has a balance owed of $300,000 and the second home equity lender has a balance of $150,000. The homeowner has now declared bankruptcy and they are letting their home go into a foreclosure. How much will the second home equity lender collect?

A) The odds are good they can get something because the first and second lenders can file claims in court and legally, they are equal partners on this property.

B) They will get nothing. It looks like a total loss for them.

C) The second home equity lender can successfully sue the lender holding the first mortgage for damages if they don't pay them off.

D) This is an easy problem to solve. The second lender simply needs to hire a torch person to burn down the house and then both lenders can fully collect what is owed to them from the fire insurance company.

4. The U.S. government is very sneaky. In order to keep the CPI (inflation rate) low what clever tactic do they use?

A) Income Taxes and Social Security FICA that is paid, which represents a large chunk of an individual's income, are not counted in the CPI. This artificially keeps the CPI low.

B) The government statisticians routinely substitute cheaper goods for more expensive ones like substituting expensive steak with cheaper hamburger meat.

C) The government statisticians routinely change the weight of different goods so that a good that might be expensive is given just a weight of 10 percent instead of the weight of the full price.

D) All of the facts listed above are true and correct.