Why Might Monetary Policy Authorities Be Concerned When Non-Bank Financial

question 174

Multiple Choice

Why might monetary policy authorities be concerned when non-bank financial intermediaries account for a growing share of an economy's financial assets?

• A) Monetary policy authorities fear that this situation might erode the value of the U.S. dollar in foreign exchange markets.
• B) Monetary policy authorities are concerned that this situation might promote income inequality since high income individuals are more likely to use the services of non-bank financial intermediaries, compared to low-income individuals.
• C) Monetary policy authorities fear that this situation might lessen their ability to control money supply because non-bank financial intermediaries are not as heavily regulated as banks.
• D) It will be more difficult for monetary policy authorities to monitor those assets that are most closely related to the level of economic activity.

Apply the midpoint formula for calculating elasticity.

Recognize the importance of percentage changes in price and quantity in determining elasticity.

Analyze how elasticity affects total revenue.

Identify factors that influence demand elasticity.

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