ANSWER AND EXPLAIN

1.How did DIDMCA and the Garn-St. Germain Act cause more problems for Savings

and Loans than they soled?

2.How did the rise of the junk bond market help to increase the number of LBOs?

3.The term leverage refers to:

a.The amount of debt that is being used.

b.The price of bonds that are being sold

c.The maximum interest rate banks can pay on deposits

d.The default risk of a bond

4.Low interest rates may, or may not, signal that a certain bank is pursuing an

"expansionary" policy.Explain

5.When a economy is suffering from deflation, the nominal or market interest

rates tend to:

a.Increase

b.Decrease

c.Becomenegative

d.Equal zero

6.There are ways to finance a war.How were they used in the past?

7.During the WWII there was relatively little inflation in the United State.Why

was this the case?

8.Rationing was used in the United States during WWII in part to:

a.Keep interest rates low.

b.Keep unemployment rate low

c.Keep inflation rate low

d.Keep the government budget deficit low

9.What roles did the US federal government and the Federal Reserve play in

helping to expand the home mortgage market after WWII?

10.Why was there a push to economically and financially integrate western Europe

after WWII?

11.Savings and Loan Associations were established to lend money to households

so that the households could:

a.Purchase houses

b.Fund their children's education

c.Afford to retire comfortably

d.Purchase automobiles

12.Explain why economists in the 1960s were so perplexed about why stagflation

had occurred.

13. In the 20th century Volcker is greatly respected, yet during the early 1989s he was

one of the most disliked people in America.Why was Volcker so disliked in the

early 1980s?Why do you think so many people changed their opinion of him?

14.Which of the following explain why Ronald Reagan and Paul Volcker agreed on

economic policy?

a.They were both from the same political party.

b.They both wanted tofocus on long - term outcomes, not short term issues

c.They both believed that low interest rates would stimulate the economy.

d.They both believed that inflation was a god thing

15.How did DIDMCA and the Garn-St. Germain Act cause more problems for Savings

and Loans than they soled?

16.How did the rise of the junk bond market help to increase the number of LBOs?

17.The term leverage refers to:

a.The amount of debt that is being used.

b.The price of bonds that are being sold

c.The maximum interest rate banks can pay on deposits

d.The default risk of a bond