Define the terms financial sector and real sector. Describe the processes by which a number of banks becoming insolvent (or approaching insolvency) can have an adverse impact on the real sector
The financial sector consists of commercial banks, investment banks, brokerage firms, and other similar entities. The real sector consists of firms that produce goods and services, individuals who buy goods and services, and individuals who work for firms, among others. When a bank is insolvent it will cease to make new loans, reducing the amount of lending in the economy. A bank approaching insolvency will be inclined to cut back on its lending activities. With less lending in the economy, there is less economic activity such as buying and producing. As production levels fall throughout the economy, some firms will slow down production and other firms will go out of business. This results in lay-offs and an increase in the number of people who are unemployed.
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In a free market for depletable natural resources, any shortage where there is an excess of quantity demanded over quantity supplied must be
a. expected as a matter of course. b. due to a price floor. c. the result of discovery of new deposits of the resources. d. artificial.
If you want to earn a high income you should figure out what others value because
A) you will then be able to charge higher prices than alternative suppliers. B) you will be able to gain at the expense of others. C) you will not have to compete in the job market. D) others will be willing to pay attractive prices for things they value.
Firm A and firm B both have total revenues of $200,000 and total costs of $250,000; firm A has total fixed costs of $40,000, while firm B has total fixed costs of $70,000. Which of the following statements are true in the short run?
A. Firm A should operate. B. Firm B should operate. C. Firm A should shut down. D. Firm B should shut down. E. both b and c
Time clocks are typically a solution to the:
A. manager-owner, principal-agent problem. B. consumer-worker, principal-agent problem. C. manager-consumer, principal-agent problem. D. None of the statements is correct.