One cost that potentially could result from central banks targeting money growth is O. high inflation. volatile interest rates. decreased independence. a slowdown in financial innovation.

Q: What has led to the downturn of the financial industry, and therefore the decrease of finance jobs?

A: The reasons for the downturn of financial industry and the subsequent recession is discussed below.…

Q: re are claims that the central bank caused the recession, and due to them, production has dropped…

A: Central bank are very important in the country and role of central banks have become major factor in…

Q: Question 1.3 General finance

A: When Grenke Corporation issues $300,000 of bonds for $315,000, it is issuing the bonds at a premium…

Q: Discuss the argument that central banks should have a mandate for price  stability to prevent an…

A: The central bank is the banker's bank. It gives advice to the government Central bank assists in…

Q: Credit markets are driving long-term changes in banks. Forces that combined to lead to a…

A: Cost of credit depends on quality of credit provided.

Q: Which of the following methods can NOT be used to improve the firm’s cash conversion cycle?…

A: Cash conversion cycle (CCC) expresses the length of time, in days, that it takes for a company to…

Q: Central Banks are in fact not at fault when it comes to turning economy into recession and…

A: Each country has its own central bank and a country’s central bank has the power to control that…

Q: Keynes believed that when the economy slowed the government should spend and create deficits to…

A: Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull…

Q: What is the effect of extending the collection period for accounts receivable? The collection cost…

A: By extending the collection period, Debtors will be encouraged to purchase more and may eventually…

Q: Which of the following statements is false?   A. Credit spreads narrow during an economic…

A: Credit Spread is the difference between the yield of the bonds with similar maturity but having…

Q: An increase in money supply coupled with a disruption in the supply chain will often cause inflation…

A: Inflation refers to an increase in the general prices of goods and services in the economy. The…

Q: How banks can improve their return on equity and what are its negative externalities.

A: RoE is ubiquitous in banks, serving as both an indicator of overall performance and a means of…

Q: Moral hazard is a barrier to financing global growth because: OPTIONS: if investors have trouble…

A: Moral hazard is a situation which occurs as a result of the lack of accurate information or…

Q: True or False   One of the factors responsible for globalization of financial markets and…

A: Deregulation is the removal or decrease of regulations that impede free competition, enabling market…

Q: M-1 when the economy is expanding than when it is experiencing a recession. Do you agree or…

A: The money multiplier will depend on the proportion of reserves that banks are required to hold by…

Q: If bad credit risks are the ones who most actively seek loans and, therefore, receive them from…

A: In this scenario, bad credit risks actively seeking loans create a situation where the lender…

Q: Tirole’s model of moral hazard associated with external financing (whether debt or equity) has…

A: A moral hazard develops when there is disproportionate knowledge between two parties and a shift in…

Q: From the point of view of the borrowing business, loan capital tends to be cheap but risky. In what…

A: Company require large amounts of money for growth and expansion and money can be raised through debt…

Q: Select all that are true regarding liquidity risk for a bank. O Consumer trust in the bank ensures a…

A: The answer is provided below.

Q: Match the correct type of bank risk with the appropriate associated statement. 1.The possibility…

A: Risk is referred as the possibility of the something bad happened. It also involves in an…

Q: Which one of the following statements is true? Market crashes tend to be accompanied by low market…

A: Market crash refers to the significant drop in the prices of stock that shows a huge level of…

Q: Stricter capital regulations such as the RBNZ’s recent increases in capital ratios will ensure that…

A: Central banks of country are the regulators of banks and they make rules and regulations for banks…

Functions of the Federal Reserve System

The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.

Elastic and Inelastic Markets

Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.