Which of the following is NOT true about so-called mortgage-backed securities:
A. Before the crisis, they were believed by many banks to be a way of reducing loan risks
B. Before the crisis, they played a major role in broadening home ownership in America
C. They were linkages that spread instability across many financial institutions
D. Their use was strongly discouraged by the Federal government
D. Their use was strongly discouraged by the Federal government
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Assume that you own an exhaustible resource that is sold competitively. The price of the resource is:
Pt + 1 - C = 1.08(Pt - C), where t = 0 at the beginning of 2005, P = price in dollars per ton, and C = marginal cost of extraction (fixed over time). It is also known that the demand for the resource is: Q = 1,000,000 - 25,000 P, where Q represents output in tons per year. If the beginning of 2005 price is $30 per ton and the marginal cost of extraction is $10 per ton, what will the price be at the end of 2009? What is the user cost of production in 2009? Is it different from the user cost for 2005? Explain. How much of the resource will be extracted in 2009? What is the market rate of interest on money? Explain.
If the Fed purchases $100,000 in government bonds from a bank, then the
A) liabilities of the bank rise by $100,000. B) reserves of the bank fall by $100,000. C) assets of the bank rise by $100,000. D) reserves of the bank rise by $100,000.
Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. Bob is likely to price discriminate because
A) elasticities differ across markets. B) the installation of carpets cannot be resold. C) Bob can probably identify which consumers belong to which segment. D) All of the above.
Refer to the information provided in Table 8.6 below to answer the question(s) that follow.
Table 8.6
Refer to Table 8.6. What is the total cost of producing zero units of output?
A. $0 B. $15 C. $30 D. indeterminate from the given information