In order to reestablish people's confidence in the banking system after the passage of the National Bank Act in 1864,
a. banks were no longer allowed to lend more than 10 percent of the value of their capital stock to any single borrower
b. banks were encouraged to accept real estate as collateral for loans
c. the office of Comptroller of the Currency was abolished
d. the Treasury was encouraged to depreciate the currency as rapidly as possible
e. Confederate notes and Greenbacks were accepted on a one-to-one basis
A
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The very existence of an insurance policy may cause people to behave in a riskier manner, which will increase the moral hazard problem
Indicate whether the statement is true or false
As default risk decreases, the expected return on corporate bonds ________, and the return becomes ________ uncertain, everything else held constant
A) increases; less B) increases; more C) decreases; less D) decreases; more
A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour producing monopoly locally because
A) the mill has a very inelastic supply curve. B) the mill is a natural monopoly. C) the mill controls a key input. D) the government will declare it a monopoly.
People who buy newly issued stock in a corporation such as Crate and Barrel provide
a. debt finance and so become part owners of Crate and Barrel. b. debt finance and so become creditors of Crate and Barrel. c. equity finance and so become part owners of Crate and Barrel. d. equity finance and so become creditors of Crate and Barrel.