The Stability of the Financial System Is Enhanced by the Ability

question 65

Multiple Choice

The stability of the financial system is enhanced by the ability of central banks to:

• A) be a lender of last resort.
• B) provide loans to insolvent banks.
• C) provide deposit insurance.
• D) convert poorly run banks into branches of the central bank.

Understand the concept and application of average accounting return (AAR).

Assess the impact of capital budgeting decisions on a firm's long-term financial health.

Identify the suitability of capital budgeting methods based on project characteristics and managerial objectives.

Calculate and interpret the discounted payback period for investment projects.

---

Definitions:

Ideology

A system of ideas and ideals, especially one that forms the basis of economic or political theory and policy.

Dominant Ideology

The prevailing cultural beliefs, values, and norms that tend to support and maintain the current power structure and societal hierarchy.

Marx

Karl Marx, a 19th-century philosopher, economist, and revolutionary socialist whose works on the critique of political economy and class struggle have profoundly influenced socialist thought.

Anomie

Durkheim’s term for a state of normlessness that results from a lack of clear goals and may ultimately result in higher suicide rates.