What is the difference between a bank that is insolvent and one that is illiquid?
What will be an ideal response?
A bank that is insolvent is in a position where the bank's assets are less than its liabilities, so it has negative bank capital. A bank that is illiquid may be solvent, meaning it has assets that exceed its liabilities, but it may not have sufficient reserves, marketable assets and capital to meet all of the depositors' demand for withdrawals.
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Which of the following will happen if consumption in an economy falls?
A) Firms' revenue fall. B) Labor supply falls. C) Mortgage defaults fall. D) Asset prices rise.
If orders exist in large volume, then the market has
A) depth. B) breadth. C) resiliency. D) None of the above.
If the required reserve ratio was increased, then: a. the money supply would tend to decrease, but the outstanding loans of banks would tend to increase. b. both the money supply and the outstanding loans of banks would tend to decrease
c. the money supply would tend to increase, but the outstanding loans of banks would tend to decrease. d. both the money supply and the outstanding loans of banks would tend to increase.
Which of the following is a certificate of indebtedness?
a. both stocks and bonds b. stocks but not bonds c. bonds but not stocks d. neither stocks nor bonds