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Q. Explain why the FDIC is following a "too-big-to-fail" policy of fully protecting all depositors at the largest banks.
Answer: It is a tricky question the FDIC does that even though officially it still applies only to the $100,000 limit. Almost certainly the idea is that the cost to one depositor is unbearable relative to the small cost we all need to pay as a collective. As well there are the issues of political pressure and avoiding blaming the government for mismanaging the safeguards.
Q. Discuss the effects of government deficits on the current account. Answer: A difficult and hard issue that during the Reagan administration the creation of twin deficits whe
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Q. What explains the sharply divergent long-run growth patterns? Answer: It lies in the political and economic features of developing countries and the way these have
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Welfare Effects of Tariff can be understood as follows: It is important to understand what the welfare effects for the tariff are. While a tariff might seem desirable because i
Q. What factors lie behind capital inflows to the developing world? Answer: Several developing countries have received a lot of capital inflows that lead them to an
Q. What are the factors that determine the amount of money an individual desires to hold? Answer: Three major factors that are first one the expected return the asset offers co
Q. Use the fixed exchange rate DD - AA model to describe the economy's short-run equilibrium. Then, use the same figure to study an expansionary monetary policy. Show that the pol
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