Briefly describe the combination of strategies used by government officials to protect investors and ensure the stability of the financial system.
What will be an ideal response?
Government officials employ a combination of strategies to protect investors and ensure the stability of the financial system. First, they provide the safety net to insure banks that face sudden deposit outflows. This consists of operating as the lender of last resort and the provider of deposit insurance. However, this safety net can result in moral hazard (bank managers have an incentive to take on too much risk), therefore the government must also engage in regulation and supervision.
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Suppose a country's net exports equal -$2.1 billion. Which of the following will happen if the volume of exports increases by $3 billion without any change in the volume of imports?
A) The country's net exports will stand at -$5.1 billion. B) The country's net exports will stand at zero. C) The country's net exports will stand at -$0.9 billion. D) The country's net exports will become positive.
Accelerator theory refers to the theory of
A) consumption that emphasizes that current consumer spending depends positively on the expected future growth of GDP. B) investment that emphasizes that current investment spending depends positively on the expected future growth of government spending. C) consumption that emphasizes that increases in consumption spending will result, through the multiplier effect, in greater increases in GDP. D) investment that emphasizes that current investment spending depends positively on the expected future growth of GDP.
Command-and-control approaches to reducing pollution can be criticized on the grounds that they may be all of the following EXCEPT
A. inflexible. B. overly expensive. C. politically unpopular. D. counterproductive.
Recall the Application about the best speed at which to sail an ocean cargo ship to answer the following question(s).Sailing an ocean cargo ship slower to save on the expense of fuel as opposed to sailing it faster to save time and therefore allow it to make more deliveries makes sense if the ________ of sailing slower is less than the ________ of sailing slower.
A. marginal benefit; marginal cost B. marginal cost; marginal benefit C. marginal benefit; opportunity cost D. marginal cost; opportunity cost