Why do banks package loans into securities?
A. To take advantage of tax breaks passed by the federal government as part of stimulus packages.
B. The banking regulations require them to do so.
C. To spread the risk of default and increase liquidity.
D. To get around adhering to current banking regulations.
Answer: C
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Suppose the real GDP in an economy in the year 1999 was $2,000 and the total population was 500 . The economy experienced a 5% growth in real GDP and a 2% growth in its population in 2000 . Calculate the change in per capita income of the economy during this period
a. +1% b. +2.5% c. -3% d. +3% e. -4%
In the __________, the currency of a country with the higher inflation rate will __________ against the currency of a country whose inflation rate is lower
a. short run; appreciate. b. short run; depreciate. c. long run; appreciate. d. long run; depreciate. e. long run; remain stable.
Referring to the Production Possibilities Frontiers in Figure 1.10 A, B, C, and D, which depicts specialized growth in pizza when there is constant opportunity cost?
Figure 1.10
A. Fig. A B. Fig. B C. Fig. C D. Fig. D
The trading losses that some banks incurred could be thought to be from trading risk, but in many cases the real cause of the losses could be attributed to moral hazard. Why was this the case?
What will be an ideal response?