What is moral hazard and how did this play

Reference no: EM133336642

Questions:

1. Who were Ben Bernanke, Henry Paulson, and Timothy Geithner, and what role did each play in the events?

2. What is Moral Hazard? How did this play into the decisions of the Fed and Treasury?

3. What is systemic risk, and what does the video suggest was its role in relation to the Banking system?

4. During the Great Depression, some 9000 banks went bankrupt, 4000 in 1933 alone. Given this is a fractional reserve system, what would happen to the Money (M1)/money multiplier, if demand deposits at bankrupt banks became worthless due to widespread bankruptcy in the banking system ?

5. What would happen to the AD curve, output, employment, and prices, assuming a normal AS curve, starting from a position of full employment, employing the real balance effect, or anything else you feel appropriate if the commercial banking system were to collapse? the use of graphs would lessen this requirement

6 Can you distinguish between the solution proposed by Paulson and the possible solution in a communist country?

7 Any thoughts about the solution, from a macroeconomic perspective?

Reference no: EM133336642

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