Principles of Economics

HW#3

Chapter 14 Money, Banks, and The Federal Reserve System

Please answer the following questions and submit it to me next class for an extra credit (2 points)

NAME:_____________________________________________________________________________

1. What is a commercial bank? How do they act?

2. What is an investment bank? How do they act?

3. What is a Ponzi Scheme?

4. What is a security? Name 2 or 3 different type of securities?

5. What is a securitization?

6. What is “Shadow Banking System”? How did it happen? Who named it?

7. What is a hedge fund?

8. What is a CDO? What is their role in the new financial system?

9. What was Glass-Steagall Act?

10. What is Gramm-Leach-Bliley Act?

11. Explain the cause s of the financial crisis in 2007-2009? Please discuss if you agree on deregulation during these years? Discuss if you believe regulation or deregulation in the financial system. (You san use the back page).