When a commercial bank borrows from a Federal Reserve Bank, ________.
A. it indicates that the commercial bank is unsound financially
B. the supply of money automatically increases
C. the commercial bank's reserves are reduced
D. the commercial bank's lending ability is increased
Answer: D
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Other things being constant, if the marginal propensity to save (MPS) is 0.1, and private investment spending falls by $100 million, then real Gross Domestic Product (GDP)
A) increases by $1 billion. B) increases by $90 million. C) decreases by $1 billion. D) decreases by $10 million.
Under the social interest theory of regulation, the goal of regulating natural monopolies is
A) to provide a larger, though not maximum, profit for the firms. B) to use average cost pricing. C) to provide an outcome similar to the competitive outcome. D) to provide a the maximum profit for the firms. E) None of the above answers is correct.
Ethiopia provides a counterexample to the claim
A) central economic planning doesn't work well. B) nations are poor because they are subject to exploitation by nations with superior military power. C) a nation can move to the ranks of the wealthiest in the world with few natural resources. D) the rule of law is necessary for economic growth.
Which of the following statements is correct?
A. An increase in exports will tend to increase, and an increase in imports will tend to decrease, the equilibrium GDP B. An increase in exports and an increase in imports will both tend to increase the equilibrium GDP C. An increase in exports and an increase in imports will both tend to decrease the equilibrium GDP D. An increase in exports will tend to decrease, and an increase in imports will tend to increase, the equilibrium GDP