Distinguish between direct finance and indirect finance. Which of these is the most important source of funds for corporations in the United States?
What will be an ideal response?
With direct finance, funds flow directly from the lender/saver to the borrower. With indirect finance, funds flow from the lender/saver to a financial intermediary who then channels the funds to the borrower/investor. Financial intermediaries (indirect finance) are the major source of funds for corporations in the U.S.
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Repeated games can lead to tacit collusion.
Answer the following statement true (T) or false (F)
Refer to Table 4-4. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $8.00; Q = 390,000 B) W = $9.50; Q = 380,000 C) W = $10.00; Q = 390,000 D) W = $8.50; Q = 380,000
Given the level of real GDP, the equilibrium level of the interest rate depends on the
A) demand for money. B) monetary-fiscal policy mix. C) size of the multiplier. D) extent of crowding out.
The argument that a Balanced Budget Amendment would be "pro-cyclical" means that it would cause
A. good times to be worse than they would otherwise be. B. bad times to be better and good times to be worse than they would otherwise be. C. bad times to be better than they would otherwise be. D. bad times to be worse than they would otherwise be.