What potential problems are created by regulatory competition?
What will be an ideal response?
Regulatory competition often allows a financial institution to select who will regulate it by selecting who charters it. One problem is that this will encourage the institution to select the regulator(s) that they believe will be the most lenient.
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Large firms sometimes have manufacturing and development that take place in multiple states. Should they be subject to taxation in every state in which they do business?
What will be an ideal response?
If the real interest rate in the United States increases, foreign investors will ________ their demand for U.S. dollars because they desire to ________ more U.S. financial assets
A) increase; buy B) increase; sell C) decrease; buy D) decrease; sell
A profit-maximizing firm hires labor until
a. the price of output equals the price of labor. b. the price of output equals the marginal product of labor c. the real wage equals the marginal product of labor. d. the real wage equals the marginal product of labor multiplied by the price of output.
In general we note that inflation:
A. hurts everyone in the economy whenever it occurs. B. hurts everyone in the economy the same. C. always decreases purchasing power. D. has very real costs associated with it.