What would cause a bank run?
A) Depositors feel that the bank does not have sufficient assets to cover their deposits.
B) Bank managers choose to hold more excess reserves.
C) Depositors feel that they are earning too low of a return on their deposits.
D) Borrowers feel that they are being charged too high of an interest rate on their loans.
A
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Given the proportion of a consumer’s income spent on various goods, the demand for is likely to be the most price inelastic.
An increase in the price of a firm's output
A) raises the value of marginal product of each unit of labor. B) shifts the firm's demand for labor curve rightward. C) results in the firm increasing the amount of output it produces. D) All of the above answers are correct.
After Hurricane Katrina, there was considerable public outrage that many of the properties were not insured against flooding although they were insured against wind damage. What might explain these different approaches to insurance?
A) The risk of wind damage is potentially diversifiable, but the risk of flooding is not. B) The risk of flood damage is potentially diversifiable, but the risk of wind damage is not. C) predatory insurance policies D) Neither the risk of wind damage or the risk of flooding is diversifiable.
Which of the following would erode the monopoly pricing power of a firm that was controlling a market?
A. The development of substitutes for the product by other firms. B. New technology developed by the firm that lowered long run average costs. C. A tax on corporate profits. D. All of these would reduce the monopoly power of the firm.