Moral hazard is a problem in providing deposit insurance because insured banks are A) more likely to make bookkeeping errors. B) overly cautious due to extra regulations adopted by the FDIC. C) more likely to provide bank managers with lavish perquisites. D) encouraged to take on more risk. ANSWER D
Date: September 10th, 2020
In an attempt to manage expectations, a central bank may prefer to announce an unconditional commitment, because an unconditional commitment ________ than a conditional commitment. A) is inherently more credible B) may have an impact on expectations that is stronger C) places fewer constraints on policy makers D) is less likely to have unintended consequences […]
Date: September 10th, 2020
The condition, MRS1,C = w, describes the representative consumer’s A) investment decision. B) consumption – savings decision. C) current period work – leisure decision. D) future period work – leisure decision. ANSWER C
Date: September 10th, 2020
A consumer may increase her saving by A) working more hours and consuming more goods in the present period. B) working more hours and consuming fewer goods in the present period. C) working fewer hours and consuming more goods in the present period. D) working fewer hours and consuming fewer goods in the present period. […]
Date: September 10th, 2020
The Troubled Asset Relief Program ________. A) led to the creation of the Federal Reserve System B) helped contribute to the stock market crash of 2006-2007 C) shifted non-performing assets off the balance sheet of the Federal Deposit Insurance Corporation onto the balance sheet of Fannie Mae and Freddie Mac D) authorized the Treasury to […]
Date: September 10th, 2020
A defense for the assumption that consumers maximize is that A) consumers never make mistakes. B) consumers do not consistently make the same mistakes. C) it allows for many possible outcomes. D) mistaken consumers may receive counseling from the government. ANSWER B
Date: September 10th, 2020
In the United States, the Federal Deposit Insurance Corporation (FDIC) usually insures the value of deposits up to A) $50,000. B) $100,000. C) $500,000. D) $1,000,000. ANSWER B
Date: September 10th, 2020
A decline in the money stock will a. shift the LM schedule to the right. b. shift the LM schedule to the left. c. not have any effect on the LM schedule. d. shift the IS schedule downward and to the right. ANSWER A
Date: September 10th, 2020
Consumer choice theory predicts that, with identical consumers, pay-as-you-go social security A) always makes all generations worse off. B) makes some generations better off, and cannot make any generation worse off. C) may make some generations worse off and cannot make any generation better off. D) may be Pareto improving. ANSWER D
Date: September 10th, 2020
In the Keynesian money market, velocity is a. negatively related to the interest rate. b. independent of the interest rate. c. positively related to the interest rate. d. is positively related to the money supply. e. is not related to the interest rate but income. ANSWER C
Date: September 10th, 2020
