Solution Found!

Krugman's Economics for AP® (High School) | 2nd Edition | ISBN: 9781464122187 | Authors: Margaret Ray
Change Question

Solved: A con artist has a great idea: hell open a bank without investing any capital

Chapter 0, Problem 2

(choose chapter or problem)

Get Unlimited Answers
QUESTION:

A con artist has a great idea: hell open a bank without investing any capital and lend all the deposits at high interest rates to real estate developers. If the real estate market booms, the loans will be repaid and hell make high profits. If the real estate market goes bust, the loans wont be repaid and the bank will failbut he will not lose any of his own wealth. How would modern bank regulation frustrate his scheme?

Questions & Answers

QUESTION:

A con artist has a great idea: hell open a bank without investing any capital and lend all the deposits at high interest rates to real estate developers. If the real estate market booms, the loans will be repaid and hell make high profits. If the real estate market goes bust, the loans wont be repaid and the bank will failbut he will not lose any of his own wealth. How would modern bank regulation frustrate his scheme?

ANSWER:

Step 1 of 2

The modern regulations related to the banking system will frustrate the con artist only because of two reasons. The modern regulations indicate that every bank must have capital requirements and must maintain cash reserves.

Add to cart

Study Tools You Might Need

Chapter: 13 Problem: 52P

Introductory Chemistry 5
Determine the mass (in g) of each sucrose solution that contains 12 g of sucrose. (a) 4.1% sucrose by mass (b) 3.2% sucrose by mass (c) 12.5% sucrose by mass

Chapter: 15 Problem: 91P

Introductory Chemistry 5
Consider the reaction. \(\mathrm{Fe}^{3+}(a q)+\mathrm{SCN}^{-}(a q) \rightleftharpoons \mathrm{FeSCN}^{2+}(a q)\) A solution is made containing initial \([\mathrm{Fe} 3+]=1.0^{*} 10-3 \mathrm{M}\) and initial \([\mathrm{SCN}-]=8.0 * 10-4 \mathrm{M} .\) At equilibrium, \([\mathrm{FeSCN} 2+]=1.7^{

Chapter: 1 Problem: 15P

Principles of General Chemistry 2
Problem 15P A compound of iodine and cesium contains 63.94 g of metal and 61.06 g of nonmetal. How many grams of cesium are in 38.77 g of compound? How many grams of iodine?

Chapter: 1 Problem: 1.1

Classical Mechanics 0
A particle moves in a circle (center O and radius R) with constant angular velocity \(\omega\) counter-clockwise. The circle lies in the xy plane and the particle is on the x axis at time t = 0. Show that the particle's position is given by \(\mathrm{r}(t)=\hat{\mathrm{x}} R

Chapter: 1 Problem: 79P

Chemistry 11
The men's world record for running a mile outdoors (as of 1999) is 3 min 43.13 s. At this rate, how long would it take to run a 1500-m race? (1 mi = 1609 m.)

Chapter: 26 Problem: 26

Biology 2e by Openstax
What is biodiversity and why is it important to an ecosystem?

Chapter: 7 Problem: 7.87

Chemistry for today : general, organic, and biochemistry 9
Ethylene glycol is mixed with water and used as an antifreeze in automobile cooling systems. If a 50% (v/v) solution is made using pure ethylene glycol and pure water, it will have a freezing point of about \(-65^{\circ} \mathrm{C}\). What will happen to the freezing point of the mixture if ethylene

Chapter: 1 Problem: 17

Chemistry 13
Do the following statements describe chemical or physical properties? (a) Oxygen gas supports combustion. (b) Fertilizers help to increase agricultural production. (c) Water boils below \(100^{\circ} \mathrm{C}\) on top of a mountain. (d) Lead is more dense than aluminum. (e)

Not The Solution You Need? Search for Your Answer Here:

×

Login

Login or Sign up for access to all of our study tools and educational content!

Forgot password?
Register Now

×

Register

Sign up for access to all content on our site!

Or login if you already have an account

×

Reset password

If you have an active account we’ll send you an e-mail for password recovery

Or login if you have your password back