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TRUE or FALSE? Rather than continue to bailout one firm at a time, the Bush Administration pushed for TARP, a sweeping program to allow the

TRUE or FALSE?

  1. Rather than continue to bailout one firm at a time, the Bush Administration pushed for TARP, a sweeping program to allow the Treasury Department to take over firms.
  2. The Federal Reserve essentially bailed out Bear Stearns by lending money to J.P. Morgan to support Morgan's buyout of Stearns.
  3. Unlike in the case of counterfeiting, the injection of new money by the banking system will benefit the early receivers at the expense of the late receivers.
  4. The "multiple deposit creation" process shows that at each succeeding stage the increase in loans falls.

5.If banks are required to hold 10% of deposits in reserves, the simple deposit multiplier (or, "maximum money multiplier") is 100.

6.To help stem the potential for massive bank runs, in October of 2008 the FDIC increased its limit on insured deposits from $100,000 to $250,000.

7.If the currency ratio is 20%, the required reserve ratio is 15% and the excess reserve ratio is 5%, the value of the M1 money multiplier is 3.0.

8.In Murphy's example, when Bill deposited $1000 in his bank nothing happened to the money supply, but when Sally borrowed it from the bank, the money supply grew.

9.Woods argues that financial regulation like Sarbanes-Oxley is especially helpful in allowing smaller firms to survive

10.Woods agrees that banning "short sales" was beneficial for the market due to the distorted price signals that these sales send out to investors.

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