Explain why depository institutions receive a disproportionate amount of attention from government regulators (compared to most other industries).
What will be an ideal response?
Depository institutions receive this attention because of their central role in the economy and their unique problems. We all rely heavily on banks for access to the payments system and this makes them unique among financial institutions. Furthermore, banks are prone to runs because they hold illiquid assets to back up liquid liabilities. This again makes banks unique compared to other financial institutions. Finally, banks are linked to each other both on their balance sheets and in their customers' minds. Bank failures can be contagious.
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Economies where some production decisions are made by the government and some are made by buyers and sellers are called
A) command economies. B) market economies. C) mixed economies. D) capitalist economies.
New residential housing is counted in GDP as a(n):
a. durable consumption good. b. household durable good. c. investment good. d. inventory expansion. e. long-term durable good.
The period of 1973 to 1980 can best be described as a time of
A. deflation. B. reflation. C. unflation. D. stagflation. E. disflation.
We say there is productive inefficiency in saving lives if
a. there is some way to save more lives b. there is some way to save more lives without sacrificing any other goods or services c. all resources are devoted to saving lives d. no resources are devoted to saving lives e. anyone dies before reaching his or her life expectancy