What is a banking panic, and what role did banking panics play in the decision by Congress to establish the Federal Reserve?
What will be an ideal response?
When the Fed was founded, its primary responsibility was to make discount loans to banks in order to deal with the bank panics, which occurred when many banks suffered from large withdrawals by depositors.
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In the above figure, what would be the wage paid and quantity of labor employed under competitive market conditions compared to monopsony conditions?
A) W1 and L1 with competition versus W2 and L2 with monopsony B) W2 and L2 with competition versus W1 and L1 with monopsony C) W2 and L2 with competition versus W3 and L1 with monopsony D) W3 and L3 with competition versus W3 and L1 with monopsony
In an open economy with fixed exchange rates, monetary policy is most effective at increasing real income if
A) capital mobility is high. B) capital mobility is low. C) capital mobility is perfect. D) monetary policy is ineffective with fixed exchange rates.
Where can equilibrium GDP be found on a graph?
a. Where the consumption function crosses the 45-degree line b. Where the 45-degree line crosses the investment function c. Where the aggregate expenditure function crosses the 45-degree line d. Where total output is equal to the unplanned inventory change e. Where the next exports function crosses the 45-degree line
In the area of taxation, the trade-off between equity and efficiency
A. never occurs since efficient taxes are often the most progressive. B. is relevant as efficient taxes are often regressive. C. is irrelevant. D. is relevant because efficient taxes are often progressive.