You have a retirement account in a bank that has failed. The balance in your account is $330,000. Does it make a difference to you if FDIC uses the payoff method or the purchase-and-assumption method for resolving this insolvency? Explain.
What will be an ideal response?
It does make a difference. Under the payoff method, the FDIC simply pays off the depositors the balance in their account up to the legal limit, which is currently $250,000. You would potentially lose $80,000. Under the purchase-and-assumption method, the FDIC will find a firm to take over the failed bank and your account will stay intact.
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Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,500 in income taxes. In this situation, the income tax system is
A) progressive. B) regressive. C) proportional. D) one of the above but we cannot tell which one without more information.
Which of the following relate(s) to gross profit margin?
a. a term often used in manufacturing businesses b. the profit margin after subtracting direct costs from wholesale revenue c. the profit margin after subtracting variable manufacturing costs d. a and b e. a through c
Government outlays
What will be an ideal response?
A benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,
a. social value = private value = private cost < social cost. b. social cost > private value = social value > private cost. c. social cost = private cost = private value < social value. d. social value = private cost = social cost > private value.