Moral hazard is the degree of risk

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Reference no: EM137816

Q1. Suppose the following data apply: Total bank Reserves: $22 billion Total bank deposits: $400 billion Cash held by public: $40 Billion Bonds held by public: $220 Billion Stocks held by public: $140 Billion Gross domestic product: $5 trillion Interest rate: 6 percent required reserve ratio: 0.05 A. How large is the money supply? B. How much excess reserves are there? c. What is the money multiplier? d. What is the available lending capacity?

Q2. Essentially, the moral hazard is the degree of risk that the insurance company is taking in order to provide coverage on the individual. Do you think you can apply this to big business in the US?

Reference no: EM137816

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