What is the goal of bank regulation?
a. to ensure borrowers have easy access to investable funds
b. to maintain the solvency of banks by ensuring maximum profits
c. to maintain the solvency of banks by avoiding excessive risk
d. to prevent banks from engaging in profitable risk
c. to maintain the solvency of banks by avoiding excessive risk
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Total income in an economy is equal to
A) the sum of wages, interest, rent, and profit. B) firm revenues. C) GDP minus net exports. D) income minus taxes.
The "rule of reason"
a. applies to business practices that are illegal regardless of their economic rationale or their consequences b. applies to business practices that are legal, regardless of their consequences c. means that business practices cannot be proven to be illegal, and a consent decree is required to halt the practices d. considers why a certain business practice was adopted and what the effects on competition are, before determining whether the practice is illegal e. focuses on market structure rather than on the behavior of firms in determining whether antitrust violations have occurred
Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has
a. confused association and causation. b. misunderstood the ceteris paribus assumption. c. used normative economics to answer a positive question. d. built an untestable model.
The federal funds rate is determined by demand and supply of bank reserves.
a. true b. false