Which of the following is NOT a reason that people tend to deposit their funds with banks rather than lend their funds directly to other individuals?
A. liquidity problems
B. asymmetric information problems
C. moral hazard problems
D. adverse selection problems
Answer: A
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Suppose that in the United States and the United Kingdom the real rate of interest is 1 percent and constant. In this case, the nominal interest rates in both countries
A) are equal. B) differ solely by the expected future spot rate differential. C) differ solely by the expected inflation differential. D) differ solely by the forward rate differential.
A credit-driven bubble arises when ________ in lending causes ________ in asset prices which can cause ________ in lending
A) a decrease; a decrease; an increase B) a decrease; an increase; an increase C) an increase; an increase; a further increase D) a decrease; a decrease; a further decrease
When the Fed buys U.S. government securities from a bank, that bank's excess reserves and required reserves increase but total reserves decrease
a. True b. False Indicate whether the statement is true or false
Minimum wage laws
a. creates a surplus of labor in markets where the equilibrium wage is above the minimum wage. b. cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place. c. are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets. d. All of the above are correct.