ROE = ROA x Equity multiplier
ROA is given already and its 1% and you know that equity multiplier = Assets/Equity = 1 billion/ 10^9 - (800x10^6) = 5% and you do the same for bank Z. remember that equity = assets - liabilities
the only factor that positively affect the demand for real money, for Friedman, is permanent income. The rest negatively affects it. Plus permanent income is the main factor to determine the demand for M/p
Because it is not regulated, you just depend on trust. You can reason logically as well. If you have a collateral, normally you behave more in line, because you have some skin in the game as well. Legal contracts are binding things, if you break them you go to jail or pay a fine. Legal contracts are somehow the same reasoning as regulation.
Anonymous Pile of Poo
1 year ago
If you think of venture capitalists, they manage soft information and relationships decrease moral hazard in that case.
When the economy is in liquidity trap, the money demand is horizontal and thus very sensitive to interest rate changes. thereby, changes in the money supply cannot affect output any longer. Thus, monetary policy becomes ineffective in stimulating output. That's why a is wrong.
amazing! thanks a lot! I think the only thing missing is the summary of the course coordinators paper "Carrying the Burden" is missing... You do not have a word file with all the articles and papers but without chapters and tasks by any chance?
I think I did up sum up the most important points about the course cordinator's paper in task 10, as this task was mainly about the paper.
I tried to upload this as a word file, however, due to the huge size of the document, it did not work as a doc and got corrupted. Thus only the pdf. So better use an online converter or something else to convert the pdf into a doc ;-)
Q7 I think the borrower will lose 1% or? (Answerkey solution = A ) Since he has to pay in real terms now 4% instead of 3%. I remember that someone told me that there were some mistakes in 2015/16 but I don't remember all of them.