In 2008, the Treasury and Federal Reserve took action to save large financial firms such as Bear Stearns and AIG from failing. Which of the following is one reason why these measures were taken?
A) The bankruptcy of a large financial firm would force the firm to sell its holdings of securities, which could cause other firms that hold these securities to also fail.
B) The Emergency Economic Stabilization Act required the Fed and the Treasury to provide financial assistance to firms that participated in regular open market actions with the Fed.
C) The failure of these firms would have forced the Fed to increase interest rates, which could have led to a severe recession.
D) The Fed and the Treasury wanted to allow Freddie Mac and Fannie Mae more time to buy the firms before they went bankrupt.
A
You might also like to view...
The ________ of a future payment is the amount of money that would need to be invested today to produce the future payments
A) implicit value B) explicit value C) present value D) real value
The utilities commission in a city is currently examining pay telephone service in the city. The commission has been asked to evaluate a proposal by a city council member to place a $0.10 price ceiling on local pay phone service
The staff economist at the utilities commission estimates the demand and supply curves for pay telephone service as follows: QD = 1600 - 2400P QS = 200 + 3200P, where P = price of a pay telephone call, and Q = number of pay telephone calls per month. a. Determine the equilibrium price and quantity that will prevail without the price ceiling. b. Analyze the quantity that will be available with the price ceiling (in the long-run). c. The city council realizes that the telephone company could curtail pay phone service in response to the ceiling. To prevent this, the council plans to impose a requirement that the telephone company must maintain the current number of pay phones. In light of this additional restriction, what will be the likely impact of the price ceiling?
If the cross-price elasticity of demand is -3, then
a. the goods are substitutes b. one good is price inelastic c. one good is an inferior good d. one good is a luxury good e. the goods are complements
Changes in the rental price of land is largely determined by: a. changes in the supply of land
b. changes in the demand for land. c. changes in the elasticity of supply of land. d. the creation of new landfills.