credit banks and money Flashcards
what is distinct about income?
income is the maximum amount you can consume and leave your wealth unchanged
Mr Bond has a wealth of £500,000. He has a market income of £40,000 per year, on which he is taxed 30%. Mr Bond’s wealth includes some equipment which depreciates at £5,000 per year. Based on this information, which of the following statements is correct?
if mr bond decides to spend 60% of his net income on consumption and the rest on investment, then his investment is £9200
The figure depicts Julia’s indifference curves for consumption in periods 1 and 2. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
the slope of the indifference curve is the MRS between the consumption in the two periods
The figure depicts Julia’s choice of consumptions in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. The current interest rate is 10%. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
at point E julie is on the highest indifference curve given her feasable set
he figure depicts four possible feasible frontiers for Marco, who has $100 worth of grain in period 1 and no income in period 2. You can click on the figure to enlarge it.
In scheme 1, he can store the grain that he does not consume in period 1. This results in 20% loss of the grain due to pests and rotting.
In scheme 2, he can sell the grain that he does not consume and lend the money at 10%.
In scheme 3, he can invest the remaining grain (e.g. plant it as seed) for a return of 50%.
In scheme 4, he can invest the entire amount of grain and borrow against his future income at 10%.
Based on this information, which of the following statements is correct?
if the rate of borrowing increases, the feasable frontier for scheme 4 tilts forward (becomes flatter)
The figure depicts Julia’s choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. She chooses the consumption choice G when the interest rate is 78%. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct regarding Julia’s balance sheet?
the asset after consumption in period 2 is 62
what is base money?
base money is broad money minus banks money
The figure shows a simplified balance sheet of a commercial bank. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
the banks leverage is 33.3
Which of the following statements are correct regarding the principal-agent problem?
common responsibility for repayments of loans, such as grameen bank is a remedy for credit constraint problem
