"Bank failure may not be limited to banks that have mismanaged their assets." Explain why?
What will be an ideal response?
A sound bank faced with the wholesale loss of deposits is likely to close its door even if the asset side of its balance sheet is fundamentally sound because many bank assets are illiquid and cannot be sold quickly to meet deposit obligations without substantial loss to the bank. Students should stress the atmosphere of financial panic, which will lead to self-fulfilling expectations.
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In the product market
A) businesses trade goods and services for resources. B) consumers trade monetary payments for goods and services. C) consumers trade goods and services for resources. D) consumers trade resources for goods and services.
The theory of comparative advantage implies that
A. the United States could have a comparative disadvantage in producing all goods and services. B. two countries can have a comparative advantage in production of the same good. C. the world gains from trade since it allows production to move to the countries where their opportunity cost is lowest. D. the country with the comparative advantage also has an absolute advantage.
PriceQuantity SuppliedQuantity Demanded$00300$110250$250180$390150$4120120$515090$618050 Refer to Table 6.1, which gives the daily supply and demand schedules for cups of coffee at a kiosk in a shopping mall. If the government places a $4 per cup tax on coffee, how many cups of coffee will be bought and sold after the tax is imposed?
A. 50 B. 90 C. 150 D. 120
Explain the concept of purchasing power parity
What will be an ideal response?