The FDIC must take steps to close down banks whose equity capital is less than ________ of assets
A) 4%
B) 3%
C) 2%
D) 1%
C
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Which of the following must exist for a firm to engage in price discrimination?
A) The firm must be able to identify and separate its buyers into different classes, and the low-price buyers cannot resell the product to the high-price buyers. B) The firm must face an inelastic demand. C) The firm must be able to realize economies of scale. D) The firm must have no more than one class of buyer. E) The firm must be a natural monopoly.
Governments are often forced to bail out large banks to prevent the entire economy from being affected adversely. This provision often encourages banks to invest in risky assets. This is an example of ________
A) moral hazard B) a positive externality C) adverse selection D) anchoring
When quantity moves proportionately the same amount as price, demand is
a. elastic, and the price elasticity of demand is 1. b. perfectly elastic, and the price elasticity of demand is infinitely large. c. perfectly inelastic, and the price elasticity of demand is 0. d. unit elastic, and the price elasticity of demand is 1.
An incentive problem arising from decentralization of decision making is that
A. managers often recruit weaker subordinates and refrain from training them properly. B. the costs of coordination among local managers is very high. C. there is less effective use of central information and expertise. D. it leads to communication problems relating to performance evaluation of employees.