One lesson learned from the bank panics of the early 1930's is:
A. the financial system will collapse without a lender of last resort.
B. only the U.S. Treasury can be a true lender of last resort.
C. the lender of last resort function almost guarantees that bank panics are a thing of the past.
D. the mere existence of a lender of last resort will not keep the financial system from collapsing.
Answer: D
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"Ceteris paribus" refers to the idea that if more than two variables are graphed, only one variable must be held constant
Indicate whether the statement is true or false
Financial crises generally develop along two basic paths
A) mismanagement of financial liberalization/globalization and severe fiscal imbalances. B) stock market declines and severe fiscal imbalances. C) mismanagement of financial liberalization/globalization and stock market declines. D) stock market declines and unanticipated declines in the value of the domestic currency.
Consider a society consisting of just a farmer and a tailor. The farmer has 30 units of food but no clothing. The tailor has 60 units of clothing but no food. Suppose each has the utility function U = F1/3C2/3
If the price of clothing is always $1, and the food price is currently $1, then we can conclude A) the market is at a competitive equilibrium. B) the price of food will drop towards a competitive equilibrium. C) the price of food will increase towards a competitive equilibrium. D) None of the above.
Larger budget deficits and tighter money tend to produce higher interest rates, a smaller share of investment in GDP, and slower growth.
Answer the following statement true (T) or false (F)