Do you think that the Fed should have bailed out large financial institutions during the credit crisis? Should the Fed or Congress decide the fate of large financial institutions that are near bankruptcy?
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A: A financial crisis is when financial instruments and resources decline altogether in esteem.
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A: Below is the given values: The equilibrium price of $100 bonds =$96 Money supply = 1 trillion
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A: Credit Facilities: Credit facilities are loans that businesses take to run their operations. A…
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A: Credit denotes a loan, while credit growth denotes the taking of more loans. Credit expansion is the…
Q: What is leverage, and why is it so important in understanding the financial crisis?
A: Leverage: The term leverage refers to the practice of investment by taking loans and borrowings. A…
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A: Introduction: Financial markets, in general, refer to any marketplace where securities are traded,…
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A: Liquidity can be defined as the ability of businesses or organisations to pay off its current…
Q: 68) In our discussion on the Global Financial Crisis/"Big Short", who was ultimately to blame for…
A: Commercial Banks: Commercial banks are those banks that accept deposits from the public and refund…
Q: Explain why you would be more or less willing to buy long-term Delta Air Lines bonds under the…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: Who was chair of the federal reserve system during the financial crisis of 2008?
A: A financial crisis is a situation when there is a significant decrease in the value of financial…
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A: PLEASE NOTE AS PER THE BARTLEY Y POLICY I HAVE ANSWERED FIRST QUESTION. PLEASE POST ANOTEHR…
Q: Market interest rates are established by the banks or any financial institutions. True or false?
A: Answer - Market Interest rate - It is the interest rate given on the deposits or other investments…
Q: The Minsky Model of a Financial Crisis . Economist Hyman Minsky believed “…the financial system in…
A: A market economy is an economic system where price is determined based on the forces of supply and…
Q: Why does the Federal Reserve (FED) raise the discount rate when the economy is strong?
A: Discount rate means interest rate.Raising or lowering nterest rate is part of the federal monetary…
Q: many people keep their savings in the piggy banks, it does not help the financial system to function…
A: Banks and other financial institutions give amazing chances to saving and contributing by people,…
Q: ) (i) On April 7th, 2020, Fitch Ratings Inc. downgrades Australia's four biggest banks credit…
A: I) When the fitch rating has downgraded the 4 biggest bank of the Australian economy it will mean…
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Q: How do financial markets help the economy? What are the key financial tools for the macroeconomy?
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Q: Great Depression
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A: Answer- Need to find- What is/are the short-term and long-term impacts of the most recent federal…
Q: Comment on the policies of the FED and the government during the Great Recession period. How do they…
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Q: How did the Lehman Brothers' collapse fit into the Great Recession?
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Q: what do you think are the main reasons that led to the subprime crisis of 2007/ 2008?
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Q: How is the Federal Reserve dealing with the economic crisis of the pandemic debt. Corporate bonds?
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A: Hey, Thank you for the question. As per our honor, code we can answer only first three sub-parts of…
Q: In terms of the financial crisis of 2007 and 2008, what were the factors that led to the mortgage…
A: Answer in step 2
Q: How should a yield curve look like in order for lenders to be encouraged to start lending again?
A: Yield curve: Yield curve is the graphical representation of different yield (interest rates) that a…
Q: Why has the government pumped billions into bank bailouts to prevent them from collapsing?
A: Bank bailouts refer to a situation when government or corporation injects funds into a bank that is…
Q: What happened the financial crisis of 2008 and 2009 ? what can do to ensure it does not happen in…
A: The crisis of 2008 was the next biggest economic downturn after the Great Depression of 1929. The…
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- During the global financial crisis, how was the Fed ableto help offset the sharp increase in financial frictionswithout the option of lowering interest rates further?Did the Fed’s plan work?We saw that former Federal Reserve Chairman Ben Bernanke argued thatlow interest rates in the United States during the mid-2000s were due to a globalsavings glut rather than to Federal Reserve policy. In an interview with Albert Huntof Bloomberg Television, Alan Greenspan, who was Federal Reserve Chairman fromAugust 1987 through January 2006, made the following similar argument: Behind the low level of long-term rates: a global savings glut as China,Russia and other emerging market economies earned more money on exportsthan they could easily invest. (a) Use two loanable funds graphs to illustrate Greenspan’s argumentthat a global savings glut caused low interest rates in the United States. Onegraph should illustrate the situation in the United States, and the other graphshould illustrate the situation in the rest of the world.(b) Why should Alan Greenspan care about a debate over the causes oflow interest rates?Predict what will happen to interest rates on a corporation’s bonds if the federal government guaranteestoday that it will pay creditors if the corporation goesbankrupt in the future. What will happen to the interestrates on Treasury securities?
- If a particular fintech company is likely to disrupt anyaspect of the country’s financial system, should thegovernment take steps to prevent it from doing so? Why orwhy not?Predict what would happen to the risk premiums ofmunicipal bonds if the federal government guaranteestoday that it will pay creditors if municipal governments default on their payments. Do you think that itwill then make sense for municipal bonds to be exemptfrom income taxes?Suppose a researcher discovers that a measure of thetotal amount of debt in the U.S. economy over thepast 20 years was a better predictor of inflation andthe business cycle than M1 or M2. Does this discoverymean that we should define money as equal to the totalamount of debt in the economy?
- (1) Why would a company’s financial managers wantto pay attention to the federal funds rate? (2) Ratherthan promising to support any too-big-to-fail banks,could the federal government instead simply warneveryone that doing business with one of these firmsis risky? Why or why not?What are some other sepcific times the FED has used this monetary policy on the economy?Why are repurchase agreements used to conduct mostshort-term monetary policy operations, rather than thesimple, outright purchase and sale of securities?
- Would the Federal Reserve INCREASE or DECREASE the nation’s money supply during a period of recession? Would the Federal Reserve INCREASE or DECREASE the money supply during a sustained period of inflation? Would the Federal Reserve RAISE OR LOWER the discount rate during a period of recession? Would the Federal Reserve BUY or SELL securities during a time of sustained inflation? Which actions did the Federal Reserve most likely take in order to accomodate the Stimulus Checks during the pandemic?The Minsky Model of a Financial Crisis . Economist Hyman Minsky believed “…the financial system in a market economy is unstable, fragile, and prone to crisis.” Explain in some detail how the financial system is “unstable, fragile and prone to crisis,” according to Minsky What did the psychological term euphoria mean to Hyman Minsky? In other words, define the term as Minsky would define it Briefly specify (but do not explain) the primary case against the market system of economic organizationExplain why you would be more or less willing to buylong-term Delta Air Lines bonds under the followingcircumstances:a. The company just released its financial statements, indicating that income decreased and liabilities increased.b. You expect a bull market in stocks (stock prices areexpected to increase).c. You have analyzed your country’s monetary policyand expect interest rates to decrease.d. Brokerage commissions on bonds fall.e. Your income and wealth increased over the last two years