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Chapter 15: Q. 4 (page 346)
Considering the following data (expressed in billions of U.S. dollars), calculate M1 and M2.
The value of measure of money supply is billion
The value of measure of money supply is role="math" localid="1651586049359" billion
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Considering the following data (expressed in billions of U.S. dollars), calculate and .
Explain the essential features of federal deposit insurance.
Identify whether each of the following events poses an adverse selection problem or a moral hazard problem in financial markets.
a. A manager of a savings and loan association responds to reports of a likely increase in federal deposit insurance coverage. She directs loan officers to extend mortgage loans to less creditworthy borrowers.
b. A loan applicant does not mention that a legal judgment in his divorce case will require him to make alimony payments to his ex-wife.
c. An individual who was recently approved for a loan to start a new business decides to use some of the funds to take a Hawaiian vacation.
Until , residents of the island of Yap used large doughnut-shaped stones as financial assets. Although prices of goods and services were not quoted in terms of the stones, the stones were often used in exchange for particularly large purchases, such as livestock. To make the transaction, several individuals would insert a large stick through a stone's center and carry it to its new owner. A stone was difficult for any one person to steal, so an owner typically would lean it against the side of his or her home as a sign to others of accumulated purchasing power that would hold value for later use in exchange. Loans would often be repaid using the stones. Which of the functions of money did the stones perform?
The reserve ratio is percent. What is the value of the potential money multiplier?
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