Answer the following short answer questions in detail and in your own words to demonstrate your understanding of the concepts. Your responses should be from your reading our course ebook (Chapters 11-14, 15 16 & 19, 20-23). You may use additional research sources to explain your answers, and please document your sources.
Madoff’s success in cheating so many investors for so long? 8pts.
do a poor job. What type of financing would you expect to find in those countries?
help to solve information problems, increasing the effectiveness of financial markets
and institutions. 8pts
their balance sheets in recent times. 8pts.
How did the policy responses to the financial crisis of 2007–2009 affect the
too-big-to-fail problem? 8pts
deposit insurance. 8pts.
Why does nearly every country in the world now have a central bank? 8pts.
pursue the path to joining the European Economic and Monetary Union (EMU)
or simply “euroize” (i.e., dollarize by using the euro for all domestic transactions).
What advice would you give? 8pts.
officials held accountable for meeting them? Explain why the chair is the most
influential Fed official. 8pts
asset purchase. Explain how the Fed’s actions are intended to work. 8pts.
than money growth in low-inflation countries? 8pts.
stock, reducing the potential level of output. What would you expect to happen
to the long-run real interest rate? What impact would this have on the monetary
policy reaction curve and the dynamic aggregate demand curve? 8pts.
government officials have decided to cut taxes. They are considering two possible
temporary tax cuts of equal size in terms of lost revenue. The first would reduce
the taxes on people with incomes above the median for one year. The second
would cut taxes on people with incomes below the median for one year. Which
change would shift the aggregate demand curve further to the right? Why? 10pts.
how an open market purchase affects the banking system’s balance sheet, and
discuss the impact on the supply of bank loans. (You may wish to refer to Chapter
17 in answering this question.) 10pts.
individual borrowers’ creditworthiness. What are the likely consequences for the
structure of the financial system? For monetary policy? 8pts