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Q. Explain the issues involved with the Fed acting as a lender of Last Resort (LLR).
Answer: On the one hand LLR make possible the Fed to avoid panic and disturbance to proper functioning of financial markets. On the other hand using the policy may possibly cause problems of moral hazard.
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Q. Suppose both governments offer their respective company a $10 million subsidy. Answer: Mutually companies would enter the market as each one knows that regardless of the o
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Q. How did the international monetary system influence macroeconomic policy-making and performance during the interwar period (1918 - 1939)? Answer: Governments efficiently sus
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Q. Consider the economy is initially consuming along the intertemporal budget constraint at point A, where no saving occurs. How does a fall in the real interest rate, r, and affe
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