Don't use Ai and chatgpt.Answer in step by step with explanation 1. U.S. financial markets in the early 20th centuryComplete the following account of the history of the U.S. financial markets in the early 20th century.The structure of U.S. financial markets was transformed as corporations moved away fromfeaturing. What happened as a result? Check all that apply.The level of output of U.S. manufacturing firms increased.The demand for labor decreased.The level of output of U.S. manufacturing firms decreased.The demand for labor increased.and toward a structandin stock prices in the first decade of the 20th century resulted from thecorporate profits.size of the U.S. economy

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Answered: 1. U.S. financial markets in the early…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 1QR

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Explain what happens in an economy when the financial markets limit access to capital. How does this affect economic growth and employment?
If borrowers have greater confidence that they will be able to repay in the future, ___________________. Question 1 The demand for financial capital will remain unchanged. The demand for financial capital will increase. The demand for financial capital will decrease. The supply of financial capital will decrease.
Question 13 Two of the economy's most important financial intermediaries are suppliers of funds and demanders of funds. banks and the bond market. the stock market and the bond market. banks and mutual funds.
31. Table 4.6 shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of foreign investors, the supply curve shifts so that there will be $10 million less supplied at every interest rate. Calculate the new equilibrium interest rate and quantity, and explain why the direction of the interest rate shift makes intuitive sense. Interest Rate Qs Qd 5% 130 170 6% 135 150 7% 140 140 8% 145 135 9% 150 125 10% 155 110
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QUESTION 11 Suppose that a new customer opens a checking account and a saving account, placing $50,000 in each. Later, the bank makes a loan of $100,000 to a business firm. For this bank a. assets increased by $100,000 because the checking and saving accounts are assets, and liabilities increased by $100,000 because the loan is a liability. b. assets increased by $50,000 because the saving account is an asset, while liabilities increased by $50,000 because the checking account is a liability. Cassets remained unchanged but liabilities increased by $100,000 because of the loan. Od-assets increased by $100,000 because the loan is an asset, and liabilities increased by $100,000 because the checking and saving accounts are liabilities.
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3. The money supply, the loanable funds market, and interest rates Changes in the money supply affect the interest rate through changes in the supply of loans, Real GDP, the price level, and the expected inflation rate. True or False: The expectations effect describes a change in the interest rate due to a change in the price level. True False The following graph shows the supply and demand curves in the market for loanable funds. Consider an increase in the price level. Adjust the following graph to show the effect of this increase in the price level. INTEREST RATE $ 24 2 QUANTITY OF LOANABLE FUNDS Which of the following refer to changes that affect both supply and demand in the loanable funds market? Check all that apply. The price-level effect The income effect The liquidity effect The expectations effect
Please explain option a,b,c
4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have a higher likelihood of default. They are made to people with relatively poor credit history. They are made to people with relatively few assets. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of these mortgages? Check all that apply. Decreased regulation of the financial sector A shift to lower-risk investments by investors The Federal Reserve setting low interest rates in the early part of the 2000s The expectation that housing prices would keep rising
5. Financial journalist James Stewart notes that in contrast to its actions with respect to Lehman Brothers: "the Fed did lend into continuing runs at both Bear Stearns and A.I.G., although officials argued then that those companies had adequate collateral to guarantee repayment.” (a) (b) What does Stewart mean by "lending into continuing runs"? Why would central banks lend into runs at financial firms? Why is the issue of whether Bear Stearns and AIG held sufficient collateral important? Is setting this criteria important for the soundness of the financial system? Briefly explain. (c) How does your answer to part (b) relate to the Fed's decision not to lend to Lehman Brothers in the days before its bankruptcy?

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