Why might there be a trade-off between a bank's profitability and its safety?
What will be an ideal response?
The assets that tend to bring the bank the highest return tend to be the least liquid. Highly liquid assets have relatively low returns. So if a bank seeks high profits it is likely to invest in relatively illiquid assets. On the other hand, a bank needs to be liquid, especially in situations where customers may desire to withdraw their deposits. If a bank does not have liquid funds or if it cannot convert illiquid assets to a liquid form without taking significant losses, it may fail.
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The Earned Income Tax Credit
a. is targeted to poor families b. is less targeted to poor families than the minimum wage c. is just a different name for the minimum wage d. operates on the labor market in exactly the same as the minimum wage
For a monopolist:
A. price equals average total cost. B. price is above marginal revenue. C. marginal revenue equals zero. D. marginal cost equals zero.
Which of the following is most likely to be a fixed cost?
A. Shipping charges. B. Property insurance premiums. C. Wages for unskilled labor. D. Expenditures for raw materials.
An increase in quantity demanded is caused by
A. a decrease in the price of the good. B. a decrease in the price of a complement. C. an increase in income. D. a change in expectations about price in the future.