Because of asymmetric information, the failure of one bank can lead to runs on other banks. This is the
A) too-big-to-fail effect.
B) moral hazard problem.
C) adverse selection problem.
D) contagion effect.
D
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One of the successes of the European Union (EU) is that banks have "passporting rights," which means that
A. banks in the EU are not required to follow the policies of a central monetary authority. B. banks in the EU can sell financial services to any EU country without regulatory barriers. C. banks in the EU have the authority to issue EU passports and travel visas to any citizen of a member country. D. banks in the EU have unlimited access to foreign financial capital.
If country A has a higher opportunity cost in producing good X than does country B, then we know that
A. country B has an absolute advantage in the production of product X. B. country B has a comparative advantage in the production of product X. C. country A has an absolute advantage in the production of product X. D. country A has a comparative advantage in the production of product X.