What is the link between the safety net provided by the government to the financial industry and the relatively heavy regulation of the same industry by the government?
What will be an ideal response?
The link is that the safety net provided, like FDIC insurance, too-big-to-fail, and lender of last resort, while very valuable also creates strong moral hazard and adverse selection problems. As a result, to minimize these problems governments have developed different strategies to manage the risks created by the safety net.
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In order to help the economy recover from a recession using fiscal policy, the government can ________ so that aggregate demand increases
A) cut taxes B) raise taxes C) cut government expenditure on goods and services D) raise interest rates E) decrease the quantity of money
The equilibrium quantity in the above figure is
A) 200 units. B) 300 units. C) 400 units. D) 600 units.
A variable cost function of the form: VC = 52 + 2Q + 3Q2 implies a marginal cost curve that is
A) constant. B) upward sloping. C) U-shaped. D) quadratic.
Portfolio investment can generally travel across borders quickly because it usually involves:
A. transfers between two bank accounts. B. the shipment of equipment from one place to another. C. the hiring or firing of foreign workers. D. two governments agreeing on trade.