Describe “bank runs.” How can “bank runs” be avoided?
What will be an ideal response?
A “bank run” is a situation where large numbers of depositors run to their banks to withdraw their money. These panic runs are often fueled by rumors that banks are about to go bankrupt. Bank runs are highly unlikely if the banker’s reserves and lending policies are prudent. Another way to avoid bank panics is by having an insurance system, such as the Federal Deposit Insurance Corporation (FDIC) in the United States, which insures checkable deposits up to a certain limit in the event that a bank goes bankrupt.
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Refer to Figure 7.1. Suppose the city passes an ordinance banning loud music, and this directly impacts Angus's legal ability to play his bagpipes. In response to this ordinance, Angus agrees to pay Dudley $225 each day to not call the police
Compared to the original scenario where there was no ordinance banning loud music, in this situation the size of the economic pie will A) shrink. B) not change. C) grow. D) More information is needed to determine the size of the economic pie.
Fred spends all of his income on two goods: DVDs and downloaded music. If Fred's marginal utility per dollar from DVDs is greater than his marginal utility per dollar from downloaded music, Fred can ________ his total utility by buying ________
A) maximize; more DVDs and more downloaded music B) increase; more downloaded music and fewer DVDs C) increase; more DVDs and less downloaded music D) maximize; fewer DVDs and less downloaded music