THEBIGSHORTTHIS IS A TRUE STORY2) SubprimeCHRISTIANBALESTEVEThe Big ShortCoordinatingComprehensionAREL QuestionsMYANGOSLINGHRADPITT1. What happened in the 1970s that would lead to the 2008 financial cri-3) Nsis?Sh ng the Market5) Credit S ore2. Why did Mark Baum criticize big banks?6) Economic BubbleI sini adW7) Collateral Debt Consolidation3. What did Micheal Burry discover?NINJALfolda10)11What do4. What does it mean to "short"?12)DefaulO galego 2002 od sobol5. What was the primary problem with mortgage bonds?

1. In the 1970s, the mortgage market shifted toward granting adjustable-rate mortgages (ARMs) and…

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Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 6CQQ

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Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…
Suppose that after a few mergers and acquisitions, onlyone bank holds 70% of all deposits in the United States.Would you say that this bank would be considered toobig to fail? What does this tell you about the ongoingprocess of financial consolidation and the governmentsafety net?
Which of these statements are true? The discount rate is normally equal to the federal funds rate. The federal funds ratre is normall higher than the discount rate. The Federal Funds rate is the rate that banks are charged when they borrow from the Fed. O The discount rate is normally higher than the federal funds rate.
Jlalt waiINIII5 auLiiUTLics eguiaLC 5latC paiin5 VVILIIU UL I DI C I15ui alILt. FDIC regulates and insure state banks that are not Fed members. The following are regulations put in place in US to reduce Risk in banking operations, EXCEPT: Restrictions on Bank Consolidation Regulation of Capital Requirements O Chartering and periodic Bank Examinations Disclosure Requirements
If you are a banker and expect interest rates to rise inthe future, would you prefer to make short-term loansor long-term loans?
What is a lender of last resort? O An institution, typically a financial institution, that can provide short term liquidity during a financial crisis. A firm that needs to borrow during crisis A group of lenders that need ot be paid immediately. A bank that has offices in resorts.
If a particular fintech company is likely to disrupt anyaspect of the country’s financial system, should thegovernment take steps to prevent it from doing so? Why orwhy not?
Explain and illustratethe deposit creationprocess throughT-accounts
List and describe thefactors that affectthe money marketand the equilibriuminterest rate
During The 2007-2008 financial crisis, Sould government purchase the devalued paper, so that financial institution can clean up their balance sheet and prevent a collapse of the financial system?
Suppose the central bank is following a constantmoney-growth-rate rule and the economy is hit witha severe economic downturn. Use an aggregate supply and demand graph to show the possible effects onthe economy. How does this situation reflect on thecredibility of the central bank if it maintains the moneygrowth rule? How does it reflect on the central bank’scredibility if it abandons the money growth rule torespond to the downturn?
12. what factors motivate the central bank to require tge two selected Dls to hold minimum amounys of liquid assets?

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