There is a continuing debate over the need for government intervention

There is a continuing debate over the need for government intervention in international business models. Provide two reason FOR government intervention and TWO negative consequences of government intervention. Which approach do you believe to be the most appropriate and why? (Remember, you should view the question for several different lenses – Community, Business owner, and government officials).

Numbers of countries throughout the world do not have the same economic advantages as many in the United States enjoy. As a result labor wages worldwide vary tremendously. For many, just having a job that pays can help their entire family survive, even if that wage is incredibly low by US comparison. Do you think it is ethical for US companies to utilize off shore workers from third world economies to increase their profits (or in many cases create some profit)? Why or why not?

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Hillside Furniture Company makes outdoor furniture from recycled

Team Assignment 2: Project-Analysis, Sales Promotions   

Background 

Hillside Furniture Company makes outdoor furniture from recycled products, including plastics and wood by products. Its three furniture products are gliders, chairs with footstools, and tables. The products appeal primarily to cost conscious consumers and those who value the recycling of materials. The company wholesales its products to retailers and various mass merchandisers. Because of the seasonal nature of the products, most orders are manufactured during the winter months for delivery in the early spring. Michael Cain, founder and owner, is dismayed that sales for two of the products are tracking below budget. The following chart shows pertinent year-to-date data regarding the company’s products.
Certain that the shortfall was caused by a lack of effort by the sales force, Michael has suggested to Lisa Boyle, the sales manager, that the company announce two contests to correct this situation before it deteriorates. The first contest is a trip to Hawaii awarded to the top salesperson if incremental glider sales are attained to close the budget shortfall. The second contest is a golf weekend, complete with a new set of golf clubs, awarded to the top salesperson if incremental sales of chairs with footstools are attained to close the budget shortfall. The Hawaiian vacation would cost $16,500 and the golf trip would cost $12,500.

Data  

Glider        Chair with Footstool        Table 
Actual    Budget    Actual    Budget    Actual    Budget
Number of units    2,600    4,000    6,900    8,000    3,500    3,300
Average sales price    $80.00    $85.00    $61.00    $65.00    $24.00    $25.00
Variable costs
Direct labor:
Hours    2.50    2.25    3.25    3.00    0.60    0.50
Cost/hour    $11.00    $10.00    $9.50    $9.25    $9.00    $9.00
Direct material    $16.00    $15.00    $11.00    $10.00    $6.00    $5.00
Sales commission    $15.00    $15.00    $10.00    $10.00    $5.00    $5.50

Promotional activity costs:
Hawaiian vacation =                $16,500
Golfing trip =                $12,500

Required      

1. Contribution margin for Gliders under each of the following assumptions: actual sales volume at budgeted selling prices, budgeted resource usage, and budgeted costs.

2. Contribution margin for Chairs with Footstools under each of the following assumptions: actual sales volume at budgeted selling prices, budgeted resource usage, and budgeted costs.

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Hospital Length of Stay (LOS). A hospital administrator is attempting

Scenario: Hospital Length of Stay (LOS). A hospital administrator is attempting reduce the length of stay in the inpatient setting at four of the systems hospitals. Each hospital leadership team has attempted to implement strategies to decrease the length of stay over the past year. Conduct an analysis on the data provided to identify the hospital closest to achieving the lowest LOS. What are your results of your descriptive statistical analysis? What other data elements would be helpful for a researcher to collect?

Perform some descriptive statistical analysis on the data you selected. Include the following standard tests: Percentages

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ECO 303 ASSIGNMENT 9 (Chapter 9)

ECO 303 ASSIGNMENT 9 (Chapter 9)   

MULTIPLE CHOICE @ 1 point each. Select the answer corresponding to the best available option

1. In banking, the spread refers to the difference between the
A) interest rate on long-term bonds and the interest rate on short-term bonds.
B) interest rate on consumer loans and the interest rate on home mortgages.
C) return earned from lending and the cost of the needed funds.
D) the difference between asset value and liability value.

2. Securities that banks sell and agree to repurchase are known as
A) NOW accounts.
B) federal funds arrangements.
C) discount loans.
D) repurchase agreements.

3. Customers who have long-term relationships with banks
A) pose particular problems with respect to adverse selection.
B) pose particular problems with respect to moral hazard.
C) reduce the moral hazard problem for the bank.
D) reduce the adverse selection and moral hazard problem for the bank.

4. Why do higher interest rates increase adverse selection problems in the loan market?
A) Higher interest rates reduce the gains from economies of scale.
B) As interest rates rise, the creditworthiness of the average loan applicant declines.
C) Higher interest rates reduce information problems in the loan market.
D) At higher interest rates fewer investment projects are profitable.

5. With respect to the last several decades, which of the following statements is true?
A) Bank net worth has been relatively stable, but the riskiness of bank activities has increased substantially.
B) Bank net worth has declined substantially, but the riskiness of bank activities has remained relatively unchanged.
C) Bank net worth has declined substantially, but the riskiness of bank activities has also declined substantially.
D) Bank net worth and the riskiness of bank activities has remained relatively stable.

6.  Which of the following is not a source of funds for commercial banks?
A) Non-deposit Borrowing.    B) Savings Deposits.    C) Treasury Securities.    D) Bank Capital (net worth)

7. The leverage ratio is the ratio of a bank’s
A) assets divided by its liabilities.                B) income divided by its assets.
C) capital divided by its total assets.            D) capital divided by its total liabilities.

8. The result of the too-big-to-fail policy is that ________ banks will take on ________ risks, making bank failures
more likely.
A) small; fewer            B) small; greater        C) big; fewer        D) big; greater

9. As a source of funds, checkable deposits have
A) expanded moderately over time.                B) expanded dramatically over time.
C) shrunk over time.                     D) remained virtually unchanged since 1960.

10. If Bank A sells some its loans to Bank B for cash, everything else equal:
A) Banks A’s total assets do not change, but Bank A is more liquid.
B) Bank A becomes less liquid while Bank B becomes more liquid.
C) Bank A’s assets decrease and Bank B’s assets increase.
D) Bank A’s liabilities decrease by the amount of the loans that are sold.

11. Banks earn a profit by
A) increasing transactions costs such as interest rates.
B) charging savers and borrowers fees for reducing transactions costs.
C) passing transactions costs on to the borrowers.
D) eliminating transactions costs.

12. U.S. bank consolidation will likely result in
A) a shift in assets from larger banks to smaller banks.    B) increased competition.
C) less international competition.                D) the elimination of small state banks.

13. If a bank has ________ rate-sensitive assets than liabilities, a ________ in interest rates will reduce bank profits,
while a ________ in interest rates will raise bank profits.
A) more; rise; decline                B) more; decline; rise
C) fewer; decline; decline                D) fewer; rise; rise

14. Credit risk management tools include:
A) deductibles.                    B) compensating balances.
C) interest rate swaps.                D) duration analysis.

15. Property promised to the lender as compensation if the borrower defaults is called ________.
A) collateral        B) deductibles        C) restrictive covenants        D) contingencies

16. Unanticipated moral hazard contingencies can be reduced by
A) screening.                    B) long-term customer relationships.
C) specialization in lending.            D) credit rationing.

17. To reduce moral hazard problems, banks include restrictive covenants in loan contracts.  In order for these restrictive covenants to be effective, banks must also
A) monitor and enforce them.
B) be willing to rewrite the contract if the borrower cannot comply with the restrictions.
C) trust the borrower to do the right thing.
D) be prepared to extend the deadline when the borrower needs more time to comply.

18. From the standpoint of ________, specialization in lending is surprising but makes perfect sense when one considers the ________ problem.
A) moral hazard; diversification            B) diversification; moral hazard
C) adverse selection; diversification        D) diversification; adverse selection

19. Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and nine million dollars in excess reserves. Given this information, we can say First National Bank faces a required reserve ratio of ________ percent.
A) ten        B) twenty        C) eighty        D) ninety

20. Suppose that from a new checkable deposit, First National Bank holds eight million dollars on deposit with the Federal Reserve, nine million dollars in excess reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in required reserves.
A) one        B) two            C) nine            D) ten

Part II: Work both of the following problems @ 4 points each.

1. Determine the maximum deposit outflow a bank can sustain without having to acquire additional reserves given the following information in thousands of dollars:
rd = 8.25%                Treasury Bills = $56,000        Bank Deposits with Fed = $32,000
Demand Deposits = $315,000        Vault Cash = $18,000        Savings Deposits = $725,000

2. Given the following information
Rate sensitive assets = $16.14m        Non rate sensitive assets = $50.66m
Rate sensitive liabilities = $24.75m        Non rate sensitive liabilities = $32.96m
Equity Capital = $9.09m

A. Perform a Standard Gap Analysis and a Duration Analysis using the above data if you have a 1.45% increase in interest rates and an average duration of assets of 6.6 years and an average duration of liabilities of 2.7 years.

B. Determine the new level of equity capital.

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ECO 303 ASSIGNMENT 8 (Chapter 8)

ECO 303 ASSIGNMENT 8 (Chapter 8)

Multiple Choice @ 1.25 point each. Select the answer corresponding to the best available option.

1) For restrictive covenants to help reduce the moral hazard problem they must be ________ by the lender.
A) monitored and enforced    B) legalized        C) easily changed        D) impossible to remove

2) Since they require less monitoring of firms, ________ contracts are used more frequently than ________ contracts to raise capital.
A) debt; equity            B) equity; debt        C) debt; loan        D) equity; stock

3) A problem for equity contracts is a particular type of ________ called the ________ problem.
A) adverse selection; principal-agent        B) moral hazard; principal-agent
C) adverse selection; free-rider            D) moral hazard; free-rider

4) American businesses get their external funds primarily from
A) bank loans.                        B) bonds and commercial paper issues.
C) stock issues.                        D) loans from nonbank financial intermediaries.

5) One financial intermediary in our financial structure that helps to reduce the moral hazard from arising from the principal-agent problem is the
A) venture capital firm.                    B) money market mutual fund.
C) pawn broker.                        D) savings and loan association.

6) Government regulations designed to reduce the moral hazard problem include
A) laws that force firms to adhere to standard accounting principles.
B) light sentences for those who commit the fraud of hiding and stealing profits.
C) state verification subsidies.
D) state licensing restrictions.

7) That only large, well-established corporations have access to securities markets
A) explains why indirect finance is such an important source of external funds for businesses.
B) can be explained by the problem of moral hazard.
C) can be explained by government regulations that prohibit small firms from acquiring funds in securities markets.
D) explains why newer and smaller corporations rely so heavily on the new issues market for funds.

8) One way of describing the solution that high net worth provides to the moral hazard problem is to say that it
A) collateralizes the debt contract.                B) makes the debt contract incentive compatible.
C) state verifies the debt contract.                D) removes all of the risk in the debt contract.

9) A key finding of the economic analysis of financial structure is that
A) the existence of the free-rider problem for traded securities helps to explain why banks play a predominant role in
financing the activities of businesses.
B) while free-rider problems limit the extent to which securities markets finance some business activities,
nevertheless the majority of funds going to businesses are channeled through securities markets.
C) given the great extent to which securities markets are regulated, free-rider problems are not of significant
economic consequence in these markets.
D) economists do not have a very good explanation for why securities markets are so heavily regulated.

10) Although debt contracts require less monitoring than equity contracts, debt contracts are still subject to ________since borrowers have an incentive to take on more risk than the lender would like.
A) moral hazard            B) agency theory        C) diversification        D) the “lemons” problem

11) In the United States, the government agency requiring that firms that sell securities in public markets adhere to standard accounting principles and disclose information about their sales, assets, and earnings is the
A) Federal Communications Commission.        B) Federal Trade Commission.
C) Securities and Exchange Commission.        D) Federal Reserve System.

12) The analysis of how asymmetric information problems affect economic behavior is called ________ theory.
A) uneven        B) parallel        C) principal        D) agency

13) Analysis of adverse selection indicates that financial intermediaries, especially banks,
A) have advantages in overcoming the free-rider problem, helping to explain why indirect finance is a more important source of business finance than is direct finance.
B) despite their success in overcoming free-rider problems, nevertheless play a minor role in moving funds to corporations.
C) provide better-known and larger corporations a higher percentage of their external funds than they do to newer
and smaller corporations which rely to a greater extent on the new issues market for funds.
D) must buy securities from corporations to diversify the risk that results from holding non-tradable loans.

14) Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are true?
A) Stocks are a far more important source of finance than are bonds.
B) Stocks and bonds, combined, supply less than one-half of the external funds.
C) Financial intermediaries are the least important source of external funds for businesses.
D) Since 1970, more than half of the new issues of stock have been sold to American households.

15) Managers (________) may act in their own interest rather than in the interest of the stockholder-owners (________) because the managers have less incentive to maximize profits than the stockholder-owners do.
A) principals; agents        B) principals; principals        C) agents; agents        D) agents; principals

16) The predominant form of household debt is
A) consumer installment debt.    B) collateralized debt.        C) unsecured debt.    D) unrestricted debt.

17) Equity contracts account for a small fraction of external funds raised by American businesses because
A) costly state verification makes the equity contract less desirable than the debt contract.
B) of the reduced scope for moral hazard problems under equity contracts, as compared to debt contracts.
C) equity contracts do not permit borrowing firms to raise additional funds by issuing debt.
D) there is no moral hazard problem when using a debt contract.

18) Of the following sources of external finance for American nonfinancial businesses, the least important in terms of raising new funds is
A) loans from banks.                    B) stocks.
C) bonds and commercial paper.                D) loans from other financial intermediaries.

19) Regulation of the financial system
A) guarantees the stability of financial systems.
B) protects the jobs of employees of financial institutions.
C) protects the wealth of owners of financial institutions.
D) promotes the stability of financial systems.

20) One reason financial systems in developing and transition countries are underdeveloped is
A) they have weak links to their governments.
B) they make loans only to nonprofit entities.
C) the legal system may be poor making it difficult to enforce restrictive covenants.
D) the accounting standards are too stringent for the banks to meet.

21) The government safety net creates _____ problem because risk-loving entrepreneurs might find banking an attractive industry.
A) a moral hazard        B) an adverse selection          C) a lemons        D) a revenue

22) The chartering process is especially designed to deal with the ________ problem, and regular bank examinations help to reduce the ________ problem.
A) adverse selection; moral hazard            B) adverse selection; adverse selection
C) moral hazard; adverse selection        D) moral hazard; moral hazard

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ECO 303 ASSIGNMENT 13 (Chapter 17)

ECO 303 ASSIGNMENT 13 (Chapter 17)

Multiple choice @ 1 point each. Select the best answer for each of the following questions.

1) The three players in the money supply process include
A) banks, depositors, and the U.S. Treasury.            B) banks, depositors, and borrowers.
C) banks, depositors, and the central bank.            D) banks, borrowers, and the central bank.

2) Both ________ and ________ are Federal Reserve liabilities.
A) securities and loans to financial institutions.
B) currency in circulation and reserves.
C) securities and reserves.
D) currency in circulation and loans to financial institutions.

3) Total reserves minus bank deposits with the Fed equals
A) vault cash.          B) excess reserves.           C) required reserves.            D) currency in circulation.

4) The monetary base minus reserves equals
A) currency in circulation.                    B) the borrowed base.
C) the nonborrowed base.                    D) discount loans.

5) Purchases and sales of government securities by the Federal Reserve are called
A) discount loans.                    B) federal fund transfers.
C) open market operations.                D) swap transactions.

6) When the Federal Reserve sells a government bond to a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant.
A) increase; increases                    B) increase; decreases
C) decrease; increases                    D) decrease; decreases

7) When the Fed buys $100 worth of bonds from a primary dealer, money in the economy should
A) increase by $100.                    B) increase by more than $100.
C) decrease by $100.                    D) decrease by more than $100.

8) When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system
A) increase by $100.                    B) increase by more than $100.
C) decrease by $100.                    D) decrease by more than $100.

9) There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.
A) sell; extend                        B) sell; call in
C) purchase; extend                    D) purchase; call in

10) Suppose a person cashes his payroll check and holds all the funds in the form of currency. Everything else held constant, total reserves in the banking system ________ and the monetary base A) remain unchanged; increases                B) decrease; increases
C) decrease; remains unchanged                D) decrease; decreases

11) The Fed does not tightly control the monetary base because it does NOT completely control
A) open market purchases.                    B) open market sales.
C) borrowed reserves.                    D) the discount rate.

12) If the required reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to
A) its excess reserves.                    B) 10 times its excess reserves.
C) 10 percent of its excess reserves.                D) its total reserves.

13) In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves, deposits in the banking system can potentially increase by
A) $10.
B) $100.
C) $100 times the reciprocal of the required reserve ratio.
D) $100 times the required reserve ratio.

14) The simple deposit multiplier can be expressed as the ratio of the
A) change in reserves in the banking system divided by the change in deposits.
B) change in deposits divided by the change in reserves in the banking system.
C) required reserve ratio divided by the change in reserves in the banking system.
D) change in deposits divided by the required reserve ratio.

15) If the required reserve ratio is 15 percent, the simple deposit multiplier is
A) 15.0.        B) 1.5.        C) 6.67.        D) 3.33.

16) A simple deposit multiplier equal to one implies a required reserve ratio equal to
A) 100 percent.    B) 50 percent.    C) 25 percent.    D) 0 percent.

17) In the simple deposit expansion model, an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed
A) sold $200 in government bonds.            B) sold $500 in government bonds.
C) purchased $200 in government bonds.        D) purchased $500 in government bonds.

18) If reserves in the banking system increase by $100, then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is
A) 0.01.        B) 0.05.        C) 0.10.        D) 0.20.

19) Decisions by depositors to increase their holdings of ________, or of banks to hold ________ will result in a smaller expansion of deposits than the simple model predicts.
A) deposits; required reserves            B) deposits; excess reserves
C) currency; required reserves            D) currency; excess reserves

20) The amount of borrowed reserves is ________ related to the discount rate, and is ________ related to the market interest rate.
A) negatively; negatively                B) negatively; positively
C) positively; negatively                D) positively; positively

21) In the model of the money supply process, the Federal Reserve’s role in influencing the money supply is represented by
A) both the required reserve ratio and the market interest rate.
B) the required reserve ratio, nonborrowed reserves, and borrowed reserves.
C) only borrowed reserves.
D) only nonborrowed reserves.

22) An assumption in the model of the money supply process is that the desired levels of currency and excess reserves
A) are given as constants.
B) grow proportionally with checkable deposits.
C) grow proportionally with high-powered money.
D) grow proportionally over time.

23) If the Fed injects reserves into the banking system and they are held as excess reserves, then the money supply
A) increases by only the initial increase in reserves.
B) increases by only one-half the initial increase in reserves.
C) increases by a multiple of the initial increase in reserves.
D) does not change.

24) If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money multiplier is
A) 2.5.        B) 1.67.        C) 2.0.        D) 0.601.

Part II: Answer the following question for 4 points.

25) a. Explain two reasons why the Fed does not have complete control over the level of bank deposits and loans.
b. Explain how a change in either factor affects the deposit expansion process.

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ECO 303 ASSIGNMENT 12 (Chapter 12)

ECO 303 ASSIGNMENT 12 (Chapter 12)

Multiple choice @ 1.25 points each. Select the best answer for each of the following questions.

1) What makes the Federal Reserve so unique compared to other central banks around the world is its
A) centralized structure.                    B) decentralized structure.
C) regulatory functions.                    D) monetary policy functions.

2) Which of the following is an entity of the Federal Reserve System?
A) the U.S. Treasury Secretary                B) the FOMC
C) the Comptroller of the Currency                D) the FDIC

3) The three largest Federal Reserve banks (New York, Chicago, and San Francisco) combined hold more than ________ percent of the assets of the Federal Reserve System.
A) 25            B) 33            C) 50            D) 67

4) The Federal Reserve Banks are ________ institutions since they are owned by the ________.
A) quasi-public; private commercial banks in the district where the Reserve Bank is located
B) public; private commercial banks in the district where the Reserve Bank is located
C) quasi-public; Board of Governors
D) public; Board of Governors

5) Each Federal Reserve bank has nine directors. Of these ________ are appointed by the member banks and  ________ are appointed by the Board of Governors.
A) three; six        B) four; five        C) five; four        D) six; three

6) Member commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock is limited by law to ________ percent annually.
A) four            B) five            C) six            D) eight

7) Which of the following functions is NOT performed by any of the twelve regional Federal Reserve Banks?
A) check clearing
B) conducting economic research
C) setting interest rates payable on time deposits
D) issuing new currency

8) Of all commercial banks, about ________ belong to the Federal Reserve System.
A) 10%            B) one half        C) one third        D) 90%

9) Prior to 1980, when market interest rates rose, member banks left the Federal Reserve System due to
A) the high cost of discount loans.            B) the high cost of required reserves.
C) a desire to avoid interest rate regulations.        D) a desire to avoid credit controls.

10) Banks subject to reserve requirements set by the Federal Reserve System include
A) only nationally chartered banks.
B) only banks with assets less than $100 million.
C) only banks with assets less than $500 million.
D) all banks whether or not they are members of the Federal Reserve System.

11) Each governor on the Board of Governors can serve
A) only one nonrenewable fourteen-year term.
B) one full nonrenewable fourteen-year term plus part of another term.
C) only one nonrenewable eight-year term.
D) one full nonrenewable eight-year term plus part of another term.

12) Which of the followings is a duty of the Board of Governors of the Federal Reserve System?
A) setting margin requirements, the fraction of the purchase price of the securities that has to be paid for with cash
B) setting the maximum interest rates payable on certain types of time deposits under Regulation Q
C) regulating credit with the approval of the president under the Credit Control Act of 1969
D) All governors advise the president of the United States on economic policy.

13) The attending members of the Federal Open Market Committee consists of the
A) five senior members of the seven-member Board of Governors.
B) seven members of the Board of Governors and seven presidents of the regional Fed banks.
C) seven members of the Board of Governors and five presidents of the regional Fed banks.
D) twelve regional Fed bank presidents and the chairman of the Board of Governors.
E) twelve regional Fed bank presidents and the seven-member Board of Governors.

14) Although reserve requirements and the discount rate are not actually set by the ________, decisions concerning these policy tools are effectively made there.
A) Federal Reserve Bank of New York            B) Board of Governors
C) Federal Open Market Committee            D) Federal Reserve Banks

15) The research document given to the Federal Open Market Committee that contains information on the state of the economy in each Federal Reserve district is called the
A) beige book.        B) green book.        C) blue book.        D) black book.

16) The Federal Open Market Committee’s “balance of risks” is an assessment of whether, in the future, its primary concern will be
A) higher exchange rates or higher unemployment.        B) higher inflation or a stronger economy.
C) higher inflation or a weaker economy.            D) lower inflation or a stronger economy.

17) Subject to the approval of the Board of Governors, the decision of choosing the president of a district Federal Reserve Bank is made by
A) all nine district bank directors.
B) the six district bank directors elected by the member banks.
C) three district bank directors who are professional bankers.
D) district bank directors who are not professional bankers.
E) class A and class B directors.

18) Members of Congress are able to influence monetary policy, albeit indirectly, through their ability to
A) withhold appropriations from the Board of Governors.
B) withhold appropriations from the Federal Open Market Committee.
C) propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies.
D) instruct the General Accounting Office to audit the foreign exchange market functions of the Federal Reserve.

19) The political business cycle refers to the phenomenon that just before elections, politicians enact ________policies. After the elections, the bad effects of these policies (for example, ________ ) have to be counteracted with ________ policies.
A) expansionary; higher unemployment; contractionary    B) expansionary; a higher inflation rate; contractionary
C) contractionary; higher unemployment; expansionary    D) contractionary; a higher inflation rate; expansionary

20) The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize
A) the public’s welfare.        B) profits.        C) its own welfare.
D) conflict with the executive and legislative branches of government.

Part II: Answer the following question for 4 points.

21) Why does the Federal Reserve Bank of New York play a special role within the Federal Reserve System?

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ECO 303 ASSIGNMENT 11 (CHAPTER 11)

ECO 303 ASSIGNMENT 11 (CHAPTER 11) 

Multiple choice @ 1.25 points each. Select the best answer for each of the following questions.

1) Allowing bank branching across state lines gives banks greater ability to coordinate bank operations. This makes it easier for them to receive the benefits of
A) the dual banking system.          B) economies of scale.
C) disintermediation.                    D) interest-rate irregularities.

2) New computer technology has
A) increased the cost of financial innovation.        B) increased the demand for financial innovation.
C) reduced the cost of financial innovation.            D) reduced the demand for financial innovation.

3) Financial innovation has caused
A) banks to suffer declines in their cost advantages in acquiring funds, although it has not caused a decline in income advantages.
B) banks to suffer a simultaneous decline of cost and income advantages.
C) banks to suffer declines in their income advantages in acquiring funds, although it has not caused a decline in cost advantages.
D) banks to achieve competitive advantages in both costs and income.

4) Disintermediation resulted from
A) interest rate ceilings combined with inflation-driven increases in interest rates.
B) elimination of Regulation Q (the regulation imposing interest rate ceilings on bank deposits).
C) increases in federal income taxes.
D) reserve requirements.

5) ________ are the only depository institutions that are tax-exempt.
A) Commercial banks              B) Savings and loans    C) Mutual savings banks        D) Credit unions

6) Banks have attempted to maintain adequate profit levels by
A) making fewer riskier loans, such as commercial real estate loans.
B) pursuing new off-balance-sheet activities.
C) increasing reserve deposits at the Fed.
D) decreasing capital accounts.

7) Which of the following is a TRUE statement concerning bank holding companies?
A) Bank holding companies own few large banks.
B) Bank holding companies have experienced dramatic growth in the past three decades.
C) The McFadden Act has prevented bank holding companies from establishing branch banks.
D) Bank holding companies can own only banks.

8) The most important development that reduced banks cost advantages was
A) the growth of the junk bond market.
B) the competition from money market mutual funds.
C) the growth of securitization.
D) the growth in the commercial paper market.

9) Nationwide banking might reduce bank failures due to
A) reduced competition.                    B) reduced lending to small businesses.
C) diversification of loan portfolios across state lines.    D) elimination of community banks.

10) The Glass-Steagall Act, before its repeal in 1999, prohibited commercial banks from
A) issuing equity to finance bank expansion.
B) engaging in underwriting and dealing of corporate securities.
C) selling new issues of government securities.
D) purchasing any debt securities.

11) The Federal Reserve Act of 1913 required that
A) state banks be subject to the same regulations as national banks.
B) national banks establish branches in the cities containing Federal Reserve banks.
C) national banks join the Federal Reserve System.
D) state banks could not join the Federal Reserve System.

12) Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the
A) transformers.        B) amalgamation.        C) movers and shakers.        D) shadow banking system.

13) Under the Gramm-Leach-Bliley Act states retain regulatory authority over
A) bank holding companies.
B) securities activities.
C) insurance activities.
D) bank subsidiaries engaged in securities underwriting.

14) With the creation of the Federal Deposit Insurance Corporation
A) member banks of the Federal Reserve System were given the option to purchase FDIC insurance for their depositors, while non-member commercial banks were required to buy deposit insurance.
B) member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors, while non-member commercial banks could choose to buy deposit insurance.
C) both member and non-member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors.
D) both member and non-member banks of the Federal Reserve System could choose, but were not required, to purchase FDIC insurance for their depositors.

15) Rising interest-rate risk
A) increased the cost of financial innovation.        B) increased the demand for financial innovation.
C) reduced the cost of financial innovation.            D) reduced the demand for financial innovation.

16) Prior to 2008, bank managers looked on reserve requirements
A) as a tax on deposits.                    B) as a subsidy on deposits.
C) as a subsidy on loans.                    D) as a tax on loans.

17) According to Edward Kane, because the banking industry is one of the most ________ industries in America, it is an industry in which ________ is especially likely to occur.
A) competitive; loophole mining                B) competitive; innovation
C) regulated; loophole mining                D) regulated; innovation

18) Bank consolidation will likely result in
A) less competition.                    B) the elimination of community banks.
C) increased competition.                    D) a shift in assets from larger banks to smaller banks.

19) Prior to 1863, all commercial banks in the United States
A) were chartered by the U.S. Treasury Department.
B) were chartered by the banking commission of the state in which they operated.
C) were regulated by the Federal Reserve.
D) were regulated by the central bank.

20) The presence of so many commercial banks in the United States is most likely the result of
A) consumers’ strong desire for dealing with only local banks.
B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks.
C) prior regulations that restricted the ability of these financial institutions to open branches.
D) consumers’ preference for state banks.

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Donoghue doesn’t present Ma as the first-person narrator of the novel

Donoghue doesn’t present Ma as the first-person narrator of the novel, but she does include Ma’s voice, particularly when it comes to the stories Ma tells to Jack. Obviously, these stories help to prepare Jack to escape, but, on a deeper level, they also reveal a lot about Ma’s own sense of identity. Choose one of the stories/books Ma tells or reads to Jack and discuss its significance to Ma’s identity in the “Dying” section of the novel.

 What does the act of storytelling say about Ma’s view of herself?  

 Why do you think Donoghue makes Ma a storyteller?

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Chowan Corporation issued $350,000 of 10% bonds

Effective Interest Discount Amortization

Chowan Corporation issued $350,000 of 10% bonds dated January 1, 2013, for $338,914.56 on Janauary 1, 2013. The bonds are due December 31, 2016, were issued to yield 11%, and pay interest semiannually on June 30 and December 31. Chowan uses the effective interest method of amortization.

Prepare the journal entries to record the issue of the bonds on January 1, 2013, and the interest payments on June 30, 2013, December 31, 2013, and June 30, 2014. If an amount box does not require an entry, leave it blank. Round your answers to two decimal places, if necessary.
In addition, prepare a bond interest expense and discount amortization schedule for the bonds through June 30, 2014.

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