1. What is the MAIN reason why several major banks collapsed in 2008? Select one
ID: 1119752 • Letter: 1
Question
1. What is the MAIN reason why several major banks collapsed in 2008?
Select one:
a. Banks invested too much money in stocks and bonds, which declined sharply in 2008
b. Banks took many risky loans that defaulted as a result of the housing market slump
c. People stopped borrowing money from banks because interest rates were too high
d. The depreciation of the dollars causes a fall in the real wealth of banks
e. The government stopped supporting banks financially in 2008
2. Which of the following events would cause the Euro to appreciate?
Select one:
a. If the European governments lowered interest rates on their bonds
b. If fewer Americans and Japanese invested in European stocks
c. If Europeans exported more goods to the United States
d. If Europeans thought that the dollar is about to rapidly appreciate
e. If more Europeans visited the United States
3. If Argentina pegged its peso to the U.S. dollar and investors thought that the Peso was about to depreciate, what would Argentina's government have to do to keep its currency fixed?
Select one:
a. Use Argentinean pesos to buy stocks in Argentina's stock market
b. Sell U.S. dollars from their foreign exchange reserves for other foreign currencies like yens or Euros
c. Print more Argentinean pesos and use them to buy dollars and Euros
d. Import more products from Europe and the U.S.
e. Use currency from its foreign exchange reserves like dollars to buy Argentinean government bonds
4.Which of the following events will decrease the amounts of dollars exchanged in the Foreign Exchange Market and will cause the dollar to depreciate?
Select one:
a. If investors were expecting a rally (a rise in prices) in the New York Stock Exchange
b. If Japan increased the interest rates that it offered on its bonds
c. If foreigners expected the dollar to depreciate
d. If more Americans traveled abroad
e. None of these answers is correct
Explanation / Answer
Ans:
1) Option A
Banks invested too much money in stocks and bonds, which declined sharply in 2008
The deregulation of banks permitted banks to engage in hedge fund trading with derivatives.which indirectly invested in stocks and bonds.
2) Option C
If Europeans exported more goods to the United States.
This will increase the demand for euro which would cause the Euro to appreciate.
3) option C
Print more Argentinean pesos and use them to buy dollars and Euros
Pegging of curreny means the pesos currency value is fixed against the value of dollar. The value of pesos currency will rises and falls along with the dollar. In order to keep its currency fixed the government will incrrease dollar reserves.
4) Option C
If foreigners expected the dollar to depreciate
If dollar is expected to depreciate the demand for dollar decreases and will cause the dollar to depreciate.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.