When did the financial crisis of 2007-2009 peak and why? Plot weekly data for 2006–2010 for the one-week LIBOR rate (FRED code: USD1WKD156N) and the effective federal funds rate (FRED code: FF). Explain the pattern.
Answer to relevant QuestionsHow did competition from money market mutual funds affect traditional savings institutions that provided mortgages at fixed interest rates? Beginning in 1981, plot the ratio of retail money market mutual funds (FRED code: ...Discuss the regulations that are designed to reduce the moral hazard created by deposit insurance.Why do you think bank managers are not always willing to pursue strategies to reduce the fragility of their institutions? You are the lender of last resort and an institution approaches you for a loan. You assess that the institution has $800 million in assets, mostly in long-term loans, and $600 million in liabilities. The institution is ...While central bank transparency is widely accepted as a desirable, too much openness may have disadvantages. Discuss what some of these drawbacks might be.
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