Answer: 1. B. The Fed did not want to be viewed as rewarding the poor business decisions of the bank's managers.
2. D. The Fed feared that assisting Lehman Brothers would increase the extent of moral hazard in the financial system.
3. B. The Fed intervened aggressively following the 2008 failure but remained largely inactive for several years following the 1930 failure.
Explanation:
1. In 1930 when the Great Depression was at it's early stages, the Central Bank could have done some things that would have reduced it's impact on the world but they remained passive and did little. One of the reasons was that there was a lack of cohesion between the Fed Districts and some of the directors subscribed to the "liquidationist" which meant that companies that engaged in adverse financial decisions be allowed to fail to as to prune the financial system and make it better. This contributed to the failure to help the Bank of the United States.
2. The Fed did not want to be seen as aiding Moral Hazard when they refused to bail out the Lehman Brothers in 2008. The Lehman Brothers had engaged in very risky transactions that brought it to ruin in 2008 and the Central Bank did not want to encourage the precedent of saving Banks that did so. Moral Hazard is when a risky action is engaged in by a company or person because they will not pay for the risk if things go awry. For example, a person with car insurance might drive more recklessly because they know that if the car crashes, the insurance will cover it. This is what the Fed did not want to encourage. A situation where Banks would engage in risky actions knowing that the Fed would back them up.
3. In the 1930s during the Great Depression, the Fed did not do enough to stem the depression because there was not coordination amongst the districts. They could not agree on a way forward and so did little. They even admitted their failure when in 2002, a member of the Board of Governors called Ben Bernanke said they could have done more.
In 2008 though, the Fed stepped in to help the economy get back on track. They reduced Interest rates and poured money into the economy through various ventures that helped the American public amongst others. Their actions ensured that the 2008 financial crises did not last as long as the Great Depression.
Of course not. Equal pay for equal work is a constant struggle for our society.
Answer:
True
Explanation:
As with concern to Marketing, the purpose is to increase the market area for the product. In the given case Frank being VP of Marketing is asked by his CEO to grow the market, and to improve the marketing strategy with the same goal.
Here, for this the Frank has to breakdown the market into smaller, simplified component strategies.
Therefore the statement provided is True.
Answer:
Interest expense ($175,000 - $40,000) $135,000
Bond premium $40,000
To Cash $175,000
(Being the interest payment is recorded)
Explanation:
The journal entry is shown below:
Interest expense ($175,000 - $40,000) $135,000
Bond premium $40,000
To Cash $175,000
(Being the interest payment is recorded)
For recording this we debited the interest expense and bond premium and credited the cash as it reduced the assets
The computation is shown below:
For premium
= Cash proceeds - face value
= $5,400,000 - $5,000,000
= $400,000
And,
The number of periods is:
= 5 years × 2
= 10 years
And,
The amortization amount
= $400,000 ÷ 10 years
= $40,000
We assumed the straight-line method is followed
Answer:
B. forcing producers to factor into their production costs , the cost of the externalities created in the production of their output
Explanation:
" internalizing an external cost " -
It is the process of shifting the cost or the burden from negative externality like the pollution , to inside .
And this process is achieved via paying taxes , the government subsidies , tolls etc .
Hence , the correct explanation for " internalizing an external cost " is ( b ) .
