How has the use of credit evolved in key sectors of the economy? Plot as ratios to total credit market debt outstanding (FRED code: TCMDO) the debt of: (a) households (FRED code: HSTCMDODNS); (b) nonfinancial corporate businesses (FRED code: NCBTCMDODNS); and (c) the domestic financial sector (FRED code: TCMDODFS). Compared with the prior two decades, account for the pattern of debt in the household sector since 2000. What do the downturns during the financial crisis in the household and financial sector ratios mean in terms of leverage? What important sector is omitted from this plot?
Answer to relevant QuestionsFinancial crisis is often associated with rising, and then persistently high, unemployment rates. Plot the U.S. unemployment rate during the Great Depression until the end of the 1930s (FRED code: M0892AUSM156SNBR). Compare ...Explain why banks’ holdings of cash have increased significantly as a portion of their balance sheets in recent times.Bank Y and Bank Z both have assets of $1 billion. The return on assets for both banks is the same. Bank Y has liabilities of $800 million while Bank Z’s liabilities are $900 million. In which bank would you prefer to hold ...Suppose a bank faces a gap of -20 between its interest-sensitive assets and its interest-sensitive liabilities. What would happen to bank profits if interest rates were to fall by 1 percentage point? You should report your ...An industry with a large number of small firms is usually thought to be highly competitive. Is that supposition true of the banking industry? What are the costs and benefits to consumers of the current structure of the ...
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