Question

Answer all please!

Which statement is true?

A. Banks face potential insolvency problems if they lose the confidence of their depositors and creditors.

B. Banks face potential liquidity problems if they try to charge high interest rates for their household and business loans.

C. Banks face potential liquidity problems because they make risky loans using their depositors' and creditors' funds.

D. Banking panics can start if banks lend out too much of their depositors' and creditors' funds.

E. Banks face potential insolvency problems because they risk their depositors' and creditors' funds by making risky loans and financial trades.

When money allows us to make transactions:

A. It serves as a medium of exchange to facilitate exchange.

B. It is usually paper money.

C. It serves as a unit of account to denominate prices and contracts.

D. It serves as a convenient store of value to transport purchasing power over time and space.

E. It is usually a form of commodity money.

Monetary policy can have a direct impact on business investment spending on new structures like factories and office towers by:

A. Changing the tax rates on profit incomes earned by businesses.

B. Changing the medium-term borrowing rates for businesses.

C. Changing the long-term borrowing rates for businesses.

D. Changing the personal tax rates on income.

E. Changing the short-term borrowing rates for businesses.

In the Keynesian theory of consumption, if the marginal propensity to consume is .8, then a decline income of 100 million will:

A. Increase consumption by $100 million..

B. Decrease consumption by $100 million.

C. Increase consumption by $180 million.

D. Decrease consumption by $180 million.

E. Decrease consumption by $80 million.

Answer 1

a) "A"

A bank face potential insolvency problem if they lose the confidence of their depositor and creditor. This can cause bak run and all the depositors will cause a loss to the bak which will lead to insolvency.

b) "A" it serves as a medium of exchange.

c) "E"

A monetary policy changes the short-term borrowing rates for the business.

d) "D"

A multiplier will result in a decrease in the actual amount and the multiplier from there. The total output decrease will be $180. (actual + multiplier).