What does "lender of last resort" mean with respect to the Federal Reserve?
(A) It will lend money to a bank in a financial emergency.
(B) It has the power to decide how much money a bank can lend out.
(C) It decides interest rates for interbank loans.
(D) It makes decisions about who a bank can lend money to.
Ans: It will lend money to a bank in a financial emergency.
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One way the venture capital firm avoids the free-rider problem is by
A) prohibiting the sale of equity in the firm to anyone except the venture capital firm. B) prohibiting members from serving on the board of directors. C) prohibiting the borrowing firm from replacing management. D) requiring collateral equal to the value of the borrowed funds.
Suppose the price of wine in Berylia is higher than the world price of wine. If the market for wine is opened to international trade, how will the total surplus in the market get affected?