When Assessing the Effects of Regulation of the Financial System

question 66

Multiple Choice

When assessing the effects of regulation of the financial system, we can say that regulation

• A)sometimes reduces the ability of the financial system to provide risk-sharing, liquidity, and information services.
• B)has always had the main goal of increasing the ability of the financial system to provide risk-sharing, liquidity, and information services.
• C)has always been directed toward the maintenance of financial stability.
• D)has largely been discontinued since 1980.

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Definitions:

Elastic

A measure in economics indicating how much the demand or supply of a good changes in response to a change in price.

Marginal Revenue

The extra revenue gained by selling an additional unit of a product or service.

Economies of Scale

Cost advantages that entities attain due to the scale of operation, with costs per unit of output generally decreasing with increasing scale.