Exam 10: Credit Markets

Consider two economies: A and B.The nominal interest rate is the same in both economies,but the rate of inflation is higher in economy B.Which of the following statements will then be true?

What is meant by the commonly used phrase "too big to fail"?

The credit supply curve is ________.

One of the impacts of maturity transformation is that ________.

If the annual inflation rate in an economy is positive,the purchasing power of a dollar kept in a bank ________.

Which of the following statements is true of the U.S.economy?

The Bank of Lithasia plans to increase its revenue by using demand deposits held with the bank for long-term investments.What is this process known as? Is there any risk associated with this process? If yes,how can the risk be reduced?

The following figure plots real interest rate against quantity of credit. -Refer to the figure above.Assume that the loanable funds market initially is in equilibrium at point D.Why might the equilibrium move to point C?

Savers are willing to lend out money because ________.

Assuming all else equal,any change that causes an increase in the credit supply at a given real interest rate will cause ________.

If the stockholders' equity of a bank is $30,000 and the total liabilities of the bank equal $10,000,the total assets of the bank will equal ________.

The value of the real estate that a bank uses for its operations will be included in the bank's ________.

Which of the following equations is correct?

The additional payment a borrower has to make on a loan is referred to as ________.

The following table shows a T-account for Bank A in a new economy. -Refer to the table above.Assume that all the banks in this new economy have the same reserve ratio.Then an increase in reserves of $250 for Bank A could increase deposits for each bank in the economy by how much?

Everything else remaining unchanged,what is likely to happen to the equilibrium real interest rate and quantity of credit if the credit demand curve shifts to the left?

In the United States,bank reserves include ________.

Which of the following will NOT be included in a bank's liabilities?

Which of the scenarios below describes a systemic risk?

Everything else remaining unchanged,what is likely to happen to the equilibrium real interest rate and quantity of credit if the credit demand curve shifts to the right?