Explain why anti-branching laws often created credit crunches that slowed economic growth.
What will be an ideal response?
When a small community bank is protected from competition almost all of its deposits and loans go to the community. For example, a small bank in a farming community would have a disproportionate number of depositors and borrowers that would be farmers. This is not sufficient diversification, which creates risk. The bank managers, aware of the risk of poor diversification may stop making loans to farmers, causing farmers to curtail operations. However, as incomes fall so will deposits and the problem can grow causing the local economy to contract.
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In June 2008, $1 bought 0.5 pounds and in October, $1 bought 0.65 pounds. As a result of this change, ________ between June and October
A) the demand for dollars increased B) the dollar appreciated and the quantity of dollars demanded decreased C) the dollar depreciated and the quantity of dollars demanded decreased D) the demand for dollars decreased
Labor economics concerns
A. the study of how households decide where to live. B. the study of income inequality. C. the study of education decisions. D. how labor markets work. E. All of these are labor economics concerns.
When a monopoly is inevitable, the government often:
A. forces it to break into smaller firms. B. sets a minimum price for the monopolist. C. sets a maximum price for the monopolist. D. None of these; monopoly is never inevitable.
A monopoly will never operate on the ____ portion of its demand curve because an increase in price _____ total revenue and _____ total cost, thereby increasing the firm's total profit
a. inelastic; decreases; decreases b. elastic; decreases; increases c. inelastic; increases; decreases d. unit elastic; does not change; increases e. inelastic; increases; increases