As Long as at Least Some Output Shocks Are Asymmetric

question 128

Multiple Choice

As long as at least some output shocks are asymmetric, it is possible to:

• A) avoid all risk.
• B) lower the volatility of income by international diversification of capital assets.
• C) lower the risk of default.
• D) avoid any consumption declines as a result of the shocks.

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Definitions:

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and ensuring financial stability.

UCC

Governing all commercial activities in the United States, the Uniform Commercial Code is a complete assembly of legal rules.

Savings and Loans

Financial institutions traditionally focused on accepting savings deposits and making mortgages and other loans.

Credit Unions

Member-owned financial cooperatives that provide savings, credit, and other financial services to their members with typically favorable interest rates and terms.