Explain the Sondra Subsidy
Please provide the best answer for the statement.
The Sondra was a company manufacturing solar panels. They developed a new technology, but were unable to secure funding to produce the panels. Investors were worried the high cost technology would not allow Sondra to compete in the industry. The Department of Energy decided to offer a guarantee on the loan, promising to pay back the loan if the company went bankrupt. This allowed investors to make a virtually risk free investment, nothing to lose if the company went bankrupt and substantial gains if the company succeeded. The company eventually went bankrupt and taxpayers were required to pay the $535 million loan.
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When a commercial bank borrows from a Federal Reserve bank,
a. the commercial bank's reserves are reduced. b. the commercial bank's lending ability is increased. c. the money supply automatically declines. d. the net worth of the bank will decline, indicating that the bank is having financial difficulties.
Which of the following would count as an investment expenditure in national income accounting?
a. General Motors hires 10 electrical engineers. b. Boeing purchases a new metal stretching machine used to produce airplane wings. c. Ms. Quantum buys 100 shares of Microsoft stock. d. A large corporation spends $10,000 per month on long-distance phone charges.