1- Why do economists worry more about the collapse of the finical sector than other sectors? 

2- Explain what herding and leverage are and how they can lead to bubble. Also, explain why leverage can cause the bursting of a bubble to be worse than it otherwise would be?

 

3- How was the great depression different from the find crisis of 2008 and 2009?

 

4- How did the fed respond to the financial cric in 2008? How did the federal government respond?

 

5- What is the law of diminishing control?

 

6- Explain the principle of comparative advantage. Does it tell vs how the gains from trade will be distributed?

 

7- Why is the financial sector important in more economic debates? Why are more economists concerned with the total amount of flows coming out of retiring to spending?

 

8- What is money? What is a liquid financial asset? Why do people hold their assets in form of money?

 

9- The major measures of money are M1 and M2 what are the major components of each of these measures? Why do economists focus their attention on M2?

 

10- Explain how banks create money. Compare the effect on the money supply of accepting a cash deposit with that of making a loan?

Answer rating: 100% (QA)

Economic Concerns Financial Sector Collapse Economists worry more about the collapse of the financial sector because it plays a critical role in facilitating transactions allocating capital and provid... View the full answer