ECS3143 tutorial 1.ppt - ECS3143 Tutorial 1 Chapter 1 2 6 2...

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ECS3143 Tutorial 1
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Chapter 1: 2, 6 2. What effect might a fall in stock prices have on business investment? 6. What is the basic activity of banks?
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Chapter 2: 1, 3, 8, 10,14,15,16 1. If I can buy a car today for $5000 and it is worth $10000 in extra income next year to me because it enables me to get a job as a travelling salesman, should I take out a loan from Larry the Loan Shark at 90% interest rate if no one else will give me a loan? Will I be better or worse off as a result of taking out this loan? Can you make a case for legalising loan sharking? 2. . Why is a share of Microsoft common stock an asset for its owner and a liability for Microsoft? 8. The US economy borrowed heavily from the British in the nineteenth century to build a rail road system. Why did this made both countries better off: 10. How does risk sharing benefit both financial intermediaries and private investors? 14. If you are an employer, what kinds of moral hazard problems might you worry
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