Questions from Managerial Economics


Q: Most legal systems assume that it is better not to incarcerate a

Most legal systems assume that it is better not to incarcerate a guilty individual than to incarcerate an innocent person (i.e., if you are making a mistake, at least choose the lesser of the two). As...

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Q: The following figure, from the Federal Reserve Monetary Policy Report to

The following figure, from the Federal Reserve Monetary Policy Report to the Congress (July 21, 2009), shows the gross issuance of mortgage backed securities (MBS) in the United States from 2007 to th...

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Q: As the effects of the 2007–2009 financial crisis became more

As the effects of the 2007–2009 financial crisis became more pervasive, legislators and policy makers debated about the role played by the Federal Reserve as a regulatory agency. While the Federal Res...

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Q: According to the FDIC, thirty banks failed or were assisted during

According to the FDIC, thirty banks failed or were assisted during 2008: six were based in California, two in Florida, and five in Nevada. The New York Times reported in 2007 that Nevada 1-36.1%2, Flo...

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Q: The following figure, from the Federal Reserve Monetary Policy Report to

The following figure, from the Federal Reserve Monetary Policy Report to the Congress (July 21, 2009), shows mortgage delinquency rates from 2001 to 2009 in the United States. a) Explain why mortgage...

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Q: According to the Federal Reserve Act of 1913 (Section 13.

According to the Federal Reserve Act of 1913 (Section 13.3), “In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, […] may authorize any Federal Reserve bank, du...

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Q: Critics of the Federal Reserve in 2013 warned that the Federal Reserve’s

Critics of the Federal Reserve in 2013 warned that the Federal Reserve’s commitment to keeping the federal funds rate near zero for an extended period of time might increase expected inflation. Explai...

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Q: Suppose a central bank identifies an increase in lending to the floral

Suppose a central bank identifies an increase in lending to the floral industry. In particular, many small businesses are borrowing aggressively to import tulips. As market participants observe a shar...

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Q: Describe the effects on the economy if the Federal Reserve uses monetary

Describe the effects on the economy if the Federal Reserve uses monetary policy to burst a wrongfully identified asset-price bubble.

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Q: What would happen to revenue from seignorage if the inflation rate was

What would happen to revenue from seignorage if the inflation rate was very high? Hint: check Equation 8 and assume a quickly rising price level.

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