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Unformatted text preview: monitor SLs and SLs had moral hazard incentives to invest in risky assets. (2) False. Because depositors are insured, they do not monitor their banks closely and they do not withdraw deposits when their banks take on great risks. This gives banks more incentives to take on risks. CHAPTER 12 1. Multiple Choice Problems 1-C; 2-B; 3-D CHAPTER 13 1. Multiple Choice Problems 1-B;2-B; 3-A; 4-B; 5-A; 6-D 1 2. Short Answer/Essay Problems (1) On March 1, 1991, you can borrow $400 and buy one ounce of gold for $400 in the spot market and sell the gold in the futures market for March 1, 1992 delivery. On March 1, 1992, you deliver the gold and receive $480 and pays back $400 that you borrowed with $40 interest. 2...
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This note was uploaded on 07/17/2008 for the course ECON 520 taught by Professor Ogaki during the Spring '07 term at Ohio State.
- Spring '07
- Economies Of Scale