What are the primary reasons for and against a policy of "too big to fail."
What will be an ideal response?
The major argument in favor of such a policy is that the failure of some large financial institutions can pose a systemic risk to the financial system. Arguments against such a policy include that it favors large banks over small banks and that it may promote moral hazard.
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Gains from trade can only occur when
A) marginal rates of substitutions differ across people. B) marginal rates of substitution are equal across people. C) indifference curves are convex. D) people find themselves on the contract curve.
The economic behavior of government is constrained by
a. limited budgets b. the absence of prices on most government output c. moral philosophy of the community d. low voter participation rates e. political self interest