A . Explain how the existence of the Federal Savings and Loan Insurance Corporation (FSLIC) may unintentionally have increased the number of S&L failures in the 1980s and 1990s. b. What safeguards can help prevent this from happening?
a . The existence of FSLIC (the government-created program to provide insurance to S&L depositors)
may have contributed to the demise of many S&Ls, because with the guarantee of deposits S&Ls had
less incentive to safeguard their own activities. This is an example of moral hazard.
b. Bank audits and examinations are the safeguards that help prevent bank failure. If weaknesses in
operations are detected early enough, serious damage can be avoided.
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Technological advances generally result in
A) increased average number of hours worked per day. B) increased infant mortality rates. C) decreased incomes. D) increased life expectancy.
The market price for wallets is $20 . Your technology is such that at your most efficient production point, the average total cost of producing a wallet is $2.50 . Your manager runs into your office and shouts, "Boss! Average costs are rising! Average costs are rising!" To make a profit-maximizing decision, you should
a. definitely decrease production b. immediately stop production c. completely ignore your manager d. ask the manager about the marginal cost e. ask the manager about the average total cost
When market trades in water occur, we can assume that
a. the party releasing water is the loser. b. the party buying water is paying too much. c. the trade in something as important as water is immoral. d. the signals and incentives flowing from the trades help many in that water market, not just the buyer and seller directly.
What is the difference between GDP and GNP?
What will be an ideal response?