Answer the following questions true (T) or false (F)
1. With the Troubled Asset Relief Program (TARP), the Treasury provided funds to banks in exchange for stock.
2. In March 2008, the Fed announced that primary dealers would be eligible to receive discount loans.
3. Despite saving Lehman Brothers from failing, the Fed and the Treasury decided to allow Bear Stearns to go bankrupt, which it did in September, 2008.
1. TRUE
2. TRUE
3. FALSE
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In a market economy, the allocation of the quantity supplied of any good among demanders is determined by
a. the needs of the individuals. b. the sellers. c. the market price. d. government regulations. e. a random process.
Market economies are based on private enterprise, which means
a. there is no private property. b. private companies control the government. c. economic decision-making happens through markets. d. all property is private.
Which of the following statements is true?
A. Adverse selection is a problem of monopoly and moral hazard is a problem of information asymmetry. B. Adverse selection and moral hazard are problems stemming from asymmetric information. C. Moral hazard is a problem that occurs before a transaction. D. Adverse selection is a problem that occurs after a transaction.
We use the term expansionary fiscal policy when the overall effect of decisions about taxation and spending is to:
A. increase aggregate demand. B. decrease aggregate demand. C. increase aggregate supply. D. decrease aggregate supply.