Briefly discuss the reasons behind the global financial crisis in 2007 -2009.

Q: How does the “too big to fail” increase moral hazard? Can you cite an example from the 2007- 2009…

A: A financial crisis is when financial instruments and resources decline altogether in esteem.

Q: What did the McKinnon and Shaw predict about the movements of interest rates once financial markets…

A: We have show that, McKinnon and Shaw predicted that interest rates would rise when it càme to…

Q: What are the three economic consequences of an asset price crash and institutional problems during a…

A: A financial crisis is an economic phase that witnesses a sharp fall in the value of asset prices and…

Q: We saw that former Federal Reserve Chairman Ben Bernanke argued that w interest rates in the United…

A: The Federal Reserve supervises financial system risks and involves at home and abroad to help make…

Q: What is the primary cause of booms and busts in a market economy with a central bank?

A: Boom and bust refer to a cycle of economic expansion and contraction. A "boom" is a period of…

Q: What will happen to the price of bonds in an open market when the federal reserve sells bonds?

A: Open Market operations refers to buying and selling of government securities or bonds in order to…

Q: What is the future of central bank frameworks ?

A: A financial organization known as a central bank has exclusive authority over the production and…

Q: Which of the following is TRUE about interest rates offered by financial Intermediaries? * A.The…

A: When talking about financial intermediaries, they are the institutions that provide financial…

Q: In his “The General Theory of Employment, Interest and Money, 1936”, John Maynard Keynes stated that…

A: While financial markets are the markets that involve trade of money instruments, capital markets and…

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: Summarize the Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems article from the…

A: The New York Times article titled "Before Collapse of Silicon Valley Bank, the Fed Spotted Big…

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…

Q: Discuss and compare the three explanations for the shape of the yield curve.

A: This can be defined as an abundance of valuable resources or possessions that hold economic or…

Q: Monetary and fiscal policies directly affect the level of activities in the financial market.  Is…

A: Monetary and fiscal policies directly affect the level of activities in the financial market.  Is it…

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.