Regular bank examinations and restrictions on asset holdings help to indirectly reduce the ________ problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs will be discouraged from entering the banking industry
A) moral hazard
B) adverse selection
C) ex post shirking
D) post-contractual opportunism
B
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Which of the following is NOT an advantage to exchange-rate targeting?
A) It provides a strong nominal anchor to keep inflation under control. B) It provides an automatic rule for policy to help avoid the time-inconsistency problem. C) It is simple and clear so that the public can easily understand it. D) It increases the accountability of policymakers.
For which of the following types of firms is the buying and selling of stocks and bonds not a primary function?
A. securities firms B. investment banks C. mutual fund companies D. thrifts
An open market purchase of bonds by the central bank will cause which of the following when a liquidity trap situation exists?
A) The interest rate will decrease. B) The interest rate will not change. C) Output will increase. D) The money supply, M, will not change. E) none of the above
Human wealth is
A) the present discounted value of expected future after-tax labor income. B) the sum of financial and housing wealth. C) the discounted present value of all financial assets. D) financial wealth minus housing wealth. E) total wealth minus housing wealth.