Reference no: EM133215344

Assignment:

Section A

1. What are the two main types of asymmetric-information problems? Give an example of each. List the major ways that banks attempt to solve asymmetric-information problems. Why are such measures necessary?

2. Explain the major options available to a bank that is short of reserves. What determines which option a bank is likely to choose? What is the spread, and why is it such an important concept for banks?

3. Explain why the government regulates banks. How does government regulation achieve its goal?

4. Describe the Gramm-Leach-Bliley Act, CAMELS rating system, Dodd-Frank Act, and the Community Reinvestment Act. How are they related or not related?

Section B

1. What are the two major determinants of the over-all growth of the economy according to the view of economic growth based on labor data? In the long run, what determines employment growth in the economy? What is the unemployment rate and how is it measured?

2. Explain the difference between general-equilibrium models and partial-equilibrium models. How are the numbers of endogenous and exogenous variables related to whether a model is a partial-equilibrium or general-equilibrium model?

3. Explain the major components of the market for goods and services. What key macroeconomic variables influence spending on those components?

4. What are some of the inconsistencies that made economists skeptical of the value of large, structural macroeconomic models? How did the overconfidence of macroeconomists after the long expansion of the 1960s lead to the inflation of the 1970s?