California State University San Marcos Economics Questions
- “Banks will always prefer a low to high capital-to-asset ratio.”Do you agree or disagree with this statement.Explain your answer.A numerical example will help in answering this question.
- The actual inflation rate in the country has recently risen.Two questions: (a) How would you go about determining whether the (market’s) expected inflation rate has also risen?(b) If you determine that the expected inflation rate has risen, then what will this do to the price of bonds and to interest rate?Explain and diagrammatically represent your answer.
