« previous next »

Author Question: The income effect explains why there is an inverse relationship between the price of a product and ... (Read 29 times)

burchfield96

  • Hero Member
  • *****
  • Posts: 610
on: Jun 29, 2018
The income effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.
 
  Indicate whether the statement is true or false

Question 2

How do depository institutions balance risk and return?
 
  What will be an ideal response?


carlsona147

  • Sr. Member
  • ****
  • Posts: 341
Reply #1 on: Jun 29, 2018
Answer to Question 1

TRUE

Answer to Question 2

Banks earn a higher return by using the funds they acquire from their deposits to buy higher-yielding, riskier assets such as loans. But these assets are risky. If the loans fail, then the bank might not have sufficient funds to repay their depositors. If the bank undertakes too much risk, then its depositors might rush to withdraw their deposits, which would cause the bank to fail. But if the bank forgoes all risky assets its profit will be much lower. So the bank must balance its search for higher return against the risk earning the return entails.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The strongest synthetic topical retinoid drug available, tazarotene, is used to treat sun-damaged skin, acne, and psoriasis.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

The Relationship Between Religion and Spirituality The Relationship Between Religion and Spirituality
Capital’s Share of Income in a Cross-Section of Countries Capital’s Share of Income in a Cross-Section of Countries
The Doppler Effect The Doppler Effect
Derivative of Inverse Trig Function Derivative of Inverse Trig Function
The threshold model explains the discontinuous distribution of some multifactorial traits. In this m The threshold model explains the discontinuous distribution of some multifactorial traits. In this m
The effect of selection on allele frequency The effect of selection on allele frequency
Video: Factors that affect conduction rates (myelination, axon diameter & temperature)

For a complete list of videos, visit our video library