In a two-period model with default, the nation defaults on its debt in the current period if
A) the market interest rate is high, the cost of defaulting is low, and national debt is high.
B) the market interest rate is low, the cost of defaulting is low, and national debt is high.
C) the market interest rate is high, the cost of defaulting is high, and national debt is low.
D) the market interest rate is low, the cost of defaulting is high, and national debt is low.
A
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The short-run Phillips curve presents a tradeoff because a
A) lower unemployment rate can be achieved at the cost of a higher inflation rate. B) higher inflation leads to a higher nominal interest rate. C) lower unemployment rate can be achieved at the cost of a lower inflation rate. D) higher price level leads to a lower real GDP. E) higher unemployment rate can be achieved at the cost of a higher inflation rate.
The too-big-to-fail policy
A) reduces moral hazard problems. B) puts large banks at a competitive disadvantage in attracting large deposits. C) treats large depositors of small banks inequitably when compared to depositors of large banks. D) allows small banks to take on more risk than large banks.