22. In an economy, if uncertainty about the health of banks causes depositors to start withdrawing funds from banks, the economy experiences a(n) A) banking crisis. B) restoration of financial condition. C) reduced adverse selection and moral hazard in financial markets. D) increasing information available to investors.
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- Which of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest rate24)To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government-sponsored enterprises (GSEs) called, ________. The GSEs role was to sell bonds to investors and use the funds to purchase mortgages from _______. Select one: a. the Fed and the Treasury Department; Households b. the Fed and Treasury Department; Banks c. Fannie Mae and Freddie Mac; Households d. Fannie Mae and Freddie Mac; Banks e. Fannie Mae and Freddie Mac; Investment Banksquestion 5 During financial/banking crises, central banks typically act as lenders of last resort to stabilize the financial system. Why is this role considered to be critical? options a. If there is a lender of last resort, this can induce another moral hazard problem between financial intermediaries and the central bank with high cost for the society. b. Large banks can be "too big to be rescued" c. Central banks are supposed to focus on inflation and the role of lender of last resort induces a conflict of interests. d. All of the above
- 24. Financial institutions that cut back on their lending are engaged in A) liability management B) deleveraging C) financial innovation D) torsion controlQ) . __________ are an efficient and convenient way for governments and corporations to borrow large sums of money from investors for a long period of time. Credit cards, Stocks, Bonds, Bank loans11) One possible reason for slower growth in developing and transition countries is A) capital may not be directed to its most productive use. B) strict accounting standards are too stringent for the banks to meet. C) the weak link between government and financial intermediaries. D) the lack of adverse selection and moral hazard problems. 12) One reason financial systems in developing and transition countries are underdeveloped is A) they have weak links to their governments. B) they make loans only to nonprofit entities. C) the legal system may be poor making it difficult to enforce restrictive covenants. D) the accounting standards are too stringent for the banks to meet. 13) Because of the weak systems of property rights in many developing and transition economies, the financial system is unable to use collateral effectively worsening the ________ problem. A) adverse selection B) moral hazard C) principal/agent D) diversification 14) In developing…
- Which of these is an example of asymmetric information in banking? a. Borrowers and lenders have different expectations about financial markets. b. Borrowers' goals are short-term while lenders' goals are long-term. c. Lenders know more about the capacity of borrowers to repay loans than borrowers. d. Borrowers know more about their capacity to repay loans than lenders.28. The two major functions of commercial banks are to: Group of answer choices a. Maintain checking accounts and lend money to individuals and firms. b. Store gold and stabilize financial markets. c. Supervise the financial activities of thrift institutions and maintain monetary stability. d. Provide for-profit services such as money orders and traveler’s checks and to store people’s valuables. e. Print and circulate money and serve as lenders of last resort.4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have a higher likelihood of default. They are made to people with relatively poor credit history. They are made to people with relatively few assets. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of these mortgages? Check all that apply. Decreased regulation of the financial sector A shift to lower-risk investments by investors The Federal Reserve setting low interest rates in the early part of the 2000s The expectation that housing prices would keep rising
- DMacroeco X + A learn.vccs.edu/courses/362470/quizzes/2905964/take E Apps M Gmail YouTube Maps Get My Payment | . Question 13 Which of the following will yield to a bank the lowest return? O Short term loans with little risk. Long term loans with a lot of risk. There is no distinction in the types of loans and risk or potential return. Loans made where the liquidity rate is the highest. Question 14 2 pts The Federal Reserve has the duty of regulating the nation's money supply. True False Question 15 2 pts P Type here to searchWrite an article of 600- 1000 words on Great Recession of 2008- Explain how moral hazard and adverse selection in the financial system led to the collapse of the financial system in Iceland? Give typing answer with explanation and conclusionQ) . __________ are an efficient and convenient way for governments and corporations to borrow large sums of money from investors for a long period of time. Credit cards, Stocks, Bonds, Bank loans Explains it correctly