Fixing the insolvency problem caused by the Great Recession, the government was reluctant to infuse equity into financial institutions because:
a. It would transfer the problem to the government but may not solve the underlying causes.
b. Equity infusions had to be funded, and the government already had a major debt problem.
c.The government could be accused of nationalizing the U.S. financial system.
d. All of the above.
.D
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Referring to a production possibilities curve and the goods being compared, depict the economic event. The bubonic plague (Black Death) in the 1300s killed one-third of Europe's population (capital goods vs. consumer goods).
A. A movement from a point inside the curve to a point on or near the curve B. A movement from a point on or near the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
If the market price of an option just before its expiration is $33 while its strike price is $29, arbitrage will determine a price for it that:
a. leaves an investor indifferent between buying the stock outright or buying an option and then exercising it. b. encourages the investor to buy the stock outright and sell it when the option expires. c. encourages the investor to buy an option and exercise it only after its expiration. d. encourages the investor to buy the stock outright and rewrite an option later.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
China exports toys to the United States; in a closed economy China must have a domestic price that is ________ the world price of toys.
A. close to B. equal to C. less than D. greater than