Author Question: The United Bank of Glassen only lent money to a limited number of big business houses. After a ... (Read 53 times)

KimWrice · **on:** Jun 30, 2018

The United Bank of Glassen only lent money to a limited number of big business houses. After a financial crisis, the bank went out of business. Which of the following reasons could have contributed to the collapse of this bank?
a. Their decision not to lend funds to the Federal Reserve
b. Their decision not to diversify their asset portfolio
c. Their decision to extend loans to a diversified pool of borrowers
d. Their decision to extend mainly short-term loans
e. Their decision to unnecessarily scrutinize each borrower's details

Question 2

Which of the following is least likely to cause a shift of the consumption function?
a. A change in the level of saving
b. A change in consumer expectations about future prices
c. A change in household wealth
d. A change in investment spending
e. A change in the interest rate