During the financial crisis of 2007-2009 in the United States it was revealed that the function of a lender of last resort had not kept pace with the evolving financial system because:
A. banks had become sufficiently diversified so as to be able to provide for their own liquidity.
B. banks were sufficiently linked to one another that the need for a lender of last resort had diminished.
C. shadow banks lacked access to the financial resources available through the lender of last resort.
D. financial intermediaries had grown sufficiently large so as not to need a lender of last resort.
Answer: C
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Figure 4.3 illustrates the demand for tacos. An increase in price of tacos would bring about a movement from
A) point a to point c. B) point c to point a. C) D2 to D0. D) D0 to D1.
Suppose that Paraguay can produce 12 wheat or 3 corn and Bolivia can produce 4 wheat or 2 corn. Suppose that opportunity costs are constant. Which of the following is a potentially agreeable trade arrangement for Paraguay and Bolivia?
A) Paraguay trades one corn to Bolivia for three units of wheat. B) Bolivia trades one corn to Paraguay for three units of wheat. C) Bolivia trades one corn to Paraguay for one wheat. D) Paraguay trades one wheat to Bolivia for two corn.
In which of the following years did oil price movements contribute to holding down inflation?
A) 1986 B) 1998 C) 2001 D) All of the above.
Historically, which of the following has had the highest average annual rate of return?
A) U.S. Treasury bonds B) corporate bonds C) money market mutual funds D) corporate stocks