"It is in the interest of each depositor to withdraw her money from a bank if all other depositors are doing the same, even when the bank's assets are sound." Discuss. As part of your answer clearly state whether the statement is true or false
What will be an ideal response?
True. Students should elaborate on bank run and stress the atmosphere of financial panic, which will lead to self-fulfilling expectations.
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Refer to Table 2-18. What is Mickey's opportunity cost of making a hat?
A) 1/10 of an umbrella B) 1/5 of an umbrella C) 5 umbrellas D) 10 umbrellas
Which of the following is a necessary condition for government subsidies to influence a firm to choose an output level as if it were a Stackelberg leader?
A) The subsidy must be announced before the firms choose output levels. B) The subsidy must be equal to the firm's marginal cost. C) The subsidy must be equal to the firm's rival's marginal cost. D) The firm does not have any fixed costs.
The Coase theorem says that, if the appropriate property right is assigned to ____, an efficient solution to an externality problem will be achieved
a. the party causing the externality b. the victim of the externality c. the party that can avoid the externality at the higher cost d. either one of the parties involved
Brian Vargo, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is
a. counted as part of the labor force and is unemployed b. considered frictionally unemployed c. an underemployed worker d. not counted as part of the labor force e. considered productively active even though he isn't working