Which of the following is a reason that banks are so heavily regulated?
A. Governments are concerned about the safety of deposits.
B. The industry is a principal determinant of aggregate demand.
C. Bank failures are contagious.
D. All of these responses are correct.
Answer: D
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A perfectly competitive firm will shutdown when the price is just below the minimum point on the
A. marginal revenue curve. B. average variable cost curve. C. average fixed cost curve. D. marginal cost curve. E. average total cost curve.
Suppose we have the following information about a plumber: wages $30,000, repair sales $200,000, taxes $5,000, loan interest $15,000, plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?
A) $200,000. B) $180,000. C) $50,000. D) $30,000.
An example of moral hazard is
a. A taxi driver paid per mile taking the shortest route b. a piece-rate garment worker shirking more than a per hour worker c. an hourly salesman working less hard than a commission salesman d. an author on contract going to as many book signings as one with a percentage royalty rate
As a result of increased tensions in the Middle East, oil production is down by 1.21 million barrels per day—a 5 percent reduction in the world’s supply of crude oil. Explain the likely impact of this event on the market for gasoline and the market for small cars.
What will be an ideal response?