Imagine a situation where the deposits at state chartered banks would be insured by a state insurance fund and deposits at nationally chartered banks would be insured by FDIC. How would you expect both depositors and banks would react?
What will be an ideal response?
Depositors would quickly learn that no state insurance fund can withstand a run on all banks in its state. As a result, they would seek to withdraw their funds and place them in a nationally chartered institution. The owners of the state chartered banks would then seek to change their charters to national charters and pick up FDIC insurance. The reason people do not fear the FDIC running out of funds is that it is backed by the U.S. Treasury and as a result can withstand a deep crisis.
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Consumers in a country buy only two goods, sneakers and manicures. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. For these data, the CPI for 2012 is
A) 145. B) 110. C) 100. D) 10. E) 160.
The unit of account is defined as
A) an object that is accepted in return for goods and services. B) the medium of exchange. C) the exchange of goods and services directly for other goods and services. D) barter. E) an agreed upon measure for stating prices of goods and services.
Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except
A) an increase in the number of manufacturers of electric cars. B) technological advancement in the production of electric car batteries. C) a decrease in the price of lithium, which is used in the electric car batteries. D) an increase in the price of gasoline.
Which of the following is a property of a public good?
a. It is established by legislation. b. Free riders are excluded. c. Users collectively consume benefits. d. It is determined by positive economics.