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ECO 205 Lecture Notes - Lecture 12: Debt Deflation, Financial Regulation, Moral Hazard

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schen84
27 May 2020
School
University at Buffalo
Department
Economics
Course
ECO 205
Professor
Proffesor

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Document Summary

It then applies our analysis to explain the course of events that led to a number of past financial crises, including the most recent global financial crisis. Identify the key features of the three stages of a financial crisis. Describe the causes and consequences of the global financial crisis of 2007 2009. Summarize the changes to financial regulation that developed in response to the global financial crisis of 2007 2009. Identify the gaps in current financial regulation and how they might be addressed with future regulatory changes. A financial crisis occurs when there is a particularly large disruption to information flows in financial markets, with the result that financial frictions increase sharply and financial markets stop functioning. Credit boom and bust: mismanagement of financial liberalization/innovation leading to asset price boom and bust. Figure 1 sequence of events in financial crises in advanced economies. The mother of all financial crises: the great depression.

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Related Questions

1. If patent owners are compensated with monopoly profits from transferred consumer surplus, consumers will be compensated by greater product variety and technological innovation, while the alternative is lower prices, fewer new products, and much less research and development. a. True b. False

2. Greater access to foreign direct investment among developing nations has increased the costs of obtaining investment capital for domestic projects that promote economic growth. a. True b. False

3. Global public goods such as health care are everywhere and are easy to identify without much disagreement. a. True b. False

4. The marginal benefits and costs of pollution abatement are commonly agreed upon, thus no objective analysis that determines the exact costs or benefits should be needed in order to determine the optimal level of social welfare. a. True b. False

5. Portfolio capital inflows can be reversed quickly and cause a financial crisis to worsen. a. True b. False

6. Developing a framework for protecting ownership rights to intellectual property has become a major issue in multilateral trade discussions. a. True b. False

7. A country with poorly developed financial markets may find that controlling short-term capital inflows to be beneficial, but capital controls in countries with highly developed financial markets are likely to be inefficient policies. a. True b. False

8. Ex ante conditionality in which IMF loan conditions are publicly known in advance may reduce asymmetric information problems associated with member nations who seek assistance. a. True b. False

9. There is an incentive to be a free rider when it comes to public goods, thus some type of coercive tax system is needed in order to fund public goods. a. True b. False

10. Adverse selection and herding behavior among lenders can result in many poor investments that go bad. a. True b. False

Can I get answers about these questions??

These questions are about Chapter 16-22 in Principles of Microecnomics sixth editon.


Monopolistic competition

· What makes a market monopolistically competitive?

· How do monopolistically competitive firms decide how much to produce and what price to set?

· How to monopolistically competitive firms make short-run and long-run choices?

· What is the role of advertising?

Oligopoly and Game Theory

· What is the prisoner’s dilemma and what are some applications?

· What is collusion and why is it difficult? What are some things that can make it harder or easier to collude?

· What is a dominant strategy?

· How can you find a Nash equilibrium in a game where a player has a dominant strategy?

Markets for Factors of Production

· How do profit maximizing firms decide how much of a factor of production (such as labor) to use? In other words what is the demand for factors of production?

· What changes the demand for factors of production?

· What determines the supply for labor? Supply for other factors of production?

· How are the rental prices and wages determined in a competitive market for factors of production?

Earnings and Discrimination

· What are some reasons why different people have different labor earnings?

· What are some difficulties in measuring discrimination?

· Why might firms that discriminate have difficulty competing?

· Why might a firm find it profitable to discriminate?

Income Inequality and Poverty

· What are some political philosophies regarding what the government should do to decrease poverty or income inequality?

· What are some policies that can reduce poverty? What are the strengths and weaknesses of these policies?

Consumer Choice

· What is the consumers budget constraint?

· How does a consumer choose how much of different goods to consume?

· What are the income and substitution effects?

· How does the demand curve relate to the consumer choice problem?

· How does the consumer choice problem relate to labor supply and borrowing/lending behavior?

Asymmetric Information and Healthcare

· What is moral hazard?

· What is adverse selection?

· How do these two concepts relate to the market for insurance and healthcare?

· How do insurance companies try to deal with adverse selection and moral hazard?