Describe what is meant by economies of scope and explain how financial institutions' realizing economies of scope has led to an increase in conflicts of interest
What will be an ideal response?
Economies of scope is when firms can reduce costs by offering different products or services. For a financial institution, this usually takes the form of taking one information source and using it to provide a different array of services. This may lead to conflicts of interest because these services may have conflicting goals in which employees of different departments may conceal information or disseminate misleading information to financial markets.
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Refer to the figure above. What is the price at which the monopolist should sell its output?
A) $3 B) $4 C) $6 D) $9
If absolute PPP holds, then the real exchange rate must equal 1
Indicate whether the statement is true or false
The idea behind the Phillips curve is that ________
A) tight labor markets lead to inflationary pressures B) when the unemployment rate is low, wages will increase C) when firms raise wages to attract new workers, prices will also increase D) all of the above E) none of the above
Which of the following is a distinctive feature of a credit-driven asset-price bubble?
A) asset-price increases that are "justified" by projections of future value B) a weakening of lending standards C) an increase in the number and variety of market participants D) The affected assets are financial stocks or bonds issued by companies in the financial sector.