"There is evidence that the string of U.S. bank closings in the early 1930s helped start and worsen the Great Depression." Discuss
What will be an ideal response?
Bank Failure can harm the economy's macroeconomic stability (keep in mind that safeguards intended to reduce the risk of bank failure were put in place after the Great Depression). One bank's problems may spread to sounder banks if they are suspected of having lent to the bank in trouble. This leads to a drastic reduction in the banking system's ability to finance investment and consumer-durable expenditure, so the economy slips into recession (or worse in the case of the Great Depression).
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Juanita goes to the Hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is
A) $35. B) $85. C) $120. D) $205.
Compared to perfect competition, a monopoly usually does not result in
a. higher prices. b. the use of fewer resources. c. a less elastic demand curve. d. less profit.
If a firm experiences economies of scope, per unit production costs fall as it produces more and more of its product
a. True b. False
Which of the following is the most important determinant of the elasticity of supply? a. The number of uses for the product
b. The number of close substitutes to the product available to consumers. c. The amount of time producers have to adjust their behavior in response to a price change. d. The percentage of their incomes consumers spend on the product.