Module 25 Practice Set 1 Multiple Choice Identify the choice that best completes the statement or answers the question. Assets Liabilities Reserves $20‚000 Deposits _________ Loans _______ Table 25-1: Balance Sheet ____ 1. Use Table 25-1. If the reserve ratio is 25%‚ loans are: A. $5‚000. B. $15‚000. C. $60‚000. D. $80‚000. E. $20‚000. ____ 2. Banks are illiquid because: A. their deposits are less liquid than their loans
Premium Fractional-reserve banking Monetary policy Central bank
Rational decision making-making decisions based on factual information and logical reasoning Marginal benefits/costs-additional benefits received when one more unit of a product is produced Specialization-the development of skills in a specific kind of work Voluntary exchange-the act of buyers and sellers freely and willingly engaging in market transactions Non-fraudulent exchange-the act of doing something on your own without someone forcing you to do it. exchanging goods‚ services‚ resources
Free Monetary policy Federal Reserve System Central bank
How Does the Stock Market Affect the Economy? This article examines how the stock prices affect the GDP. “According to the Federal Reserve Board’s model‚ a 20 percent decline in stock prices lower the GDP by about 1.25% after one year.” For only one year‚ we can conclude that yes‚ the stock market in some ways does effect the economy. Many economists agree that stock market affects the economy‚ while there are still others that think there are many other influences that affect the economy and not
Premium Economics Stock market Investment
Chapter 3: Second industrial Revolution: -many believe began with Bessemer steel process -firms grew‚ with this came market power -rising concern over monopolies let to anti-trust legislation -worried that Malthus’s economic prediction might come true-that growth would explode‚ leading to more-thinly spread resources (food) among starving and dying population (appendix 20.1)-the classical(malthusian) growth model -from 1860-1890: real wages for manufacturing employees increased
Free Monetary policy Federal Reserve System Economics
University of the District of Columbia Money and Banking Professor Muhammad Samhan March 4‚ 2013 Table of Contents Executive Summary 3 Findings 4 Risk 10 Regulation 11 Conclusion 12 Bibliography 13 Executive Summary This paper documents the institutional features of shadow banks‚ discusses their economic roles‚ and analyzes their relationship to the traditional banking system. It utilizes the print and web resources supplied in its bibliography to focus on institutional
Premium Collateralized debt obligation Bank Bank run
ROLE OF BANKS First‚ they take a leading role in developing other financial intermediaries and markets. Second‚ due to the absence of well-developed equity and bond markets‚ the corporate sector depends heavily on banks to meet its financing needs. Finally‚ in emerging markets such as India‚ banks cater to the needs of a vast number of savers from the household sector‚ who prefer assured income and liquidity and safety of funds‚ because of their inadequate capacity to manage financial risks Definition
Premium Fractional-reserve banking Bank Monetary policy
1. Would Henry Hazlitt more likely: a. Say we are already suffering the long-run consequences of the policies of the remote or recent past. b. Advocate public or collective ownership and administration of the means of production and distribution of goods. c. Argue for more governmental stimulus to help the economy. 2. Would Henry Hazlitt more likely say: a. That government should fund public works to maintain full employment. b. The art of economics consists in looking not merely at the
Free Federal Reserve System Monetary policy Currency
retained many protective features (1913). Choices: Technological improvements‚ added so much to the nation’s productivity‚ continually reduced the demand for skilled labor. Before 1874‚ women and child factory workers performed 10 hours a day. Federal troops had to be sent to several locations before the Great Rail Strike of 1877 was ended. Roosevelt declared his determination to give all the American people a “Square Deal”. He captured the imagination of the ordinary individuals; approved progressive
Premium History of the United States Woodrow Wilson Theodore Roosevelt
interest rate ceilings over a period of six years‚ thus allowing depository institutions to operate in the market with competitive rates of return. It also increased the depository insurance from $40‚000 to $100‚000 and required all banks to hold reserves with the Fed. The second act‚ the Garn-St. Germain Act of 1982‚ introduced under President Reagan‚ authorized thrifts to diversify their portfolio where they could hold 10% of their assets into
Premium Economics Monetary policy Subprime mortgage crisis
[pic] THE INTERNAL CONTROLS AND FINANCIAL ACTIVITIES THAT LED TO THE BAILOUT OF OUR NATION’S LARGEST INSURANCE COMPANY By: Monte Schwartz PREFACE Anyone who watches TV has most likely seen the American International Group (hereinafter AIG) commercial with the little boy who walks into his parent’s room while they are sleeping. When his mother asks if he had a nightmare‚ he says “no” and that he’s worried about his parent’s financial future. After a twenty-second
Premium Insurance Federal Reserve System