When banks bundled mortgage loans and sold the resulting mortgage-backed securities:
A. they insulated the banking system from any risk associated with mortgage defaults.
B. they greatly reduced the overall risk of mortgage defaults.
C. buyers of these securities assumed all of the risk of mortgage defaults.
D. they reduced their direct exposure to mortgage default risk but were still exposed through
loans to investors in mortgage-backed securities.
D. they reduced their direct exposure to mortgage default risk but were still exposed through
loans to investors in mortgage-backed securities.
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Refer to Figure 18-2. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?
A) Interest rates rise in the United States. B) Real income falls in England. C) Real income rises in the United States. D) Interest rates rise in England.
If firms are producing efficiently, but consumers can reallocate goods amongst themselves,
A) the equilibrium is not efficient. B) the equilibrium is efficient. C) the consumers are behaving irrationally. D) the firms are too greedy.