What is the role of the "discount window" in preventing financial crises? How was it used during the financial crisis of 2007-2009?
What will be an ideal response?
By standing ready to lend struggling financial institutions as much money as they need to weather a crisis, the Federal Reserve is able to prevent banks from failing and stop a widespread financial panic. Banks are charged the "discount rate" for borrowing from the Federal Reserve. During the financial crisis of 2007-2009, the Federal Reserve encouraged financial institutions to borrow from the Fed and created several new ways of lending, including the Term Auction Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility.
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Horizontal merger occurs when
A) two firms merge where one had sold its output to the other as an input. B) the merger moves the combined firm onto the horizontal portion of its long-run average cost curve. C) two firms merge where each is about the same size. D) two firms producing a similar product merge.
A 1977 amendment to the Federal Reserve Act of 1913
a. requires the Federal Reserve to place more weight on promoting price stability than on promoting maximum employment. b. requires the Federal Reserve to place more weight on promoting maximum employment than on promoting price stability. c. requires the Federal Reserve to place equal weight on promoting price stability and maximum employment. d. says the Federal Reserve should promote price stability and maximum employment, but does not specify how the Federal Reserve should weight these goals.
What is the cost of money?
(A) The economy's use of open market operations. (B) The bank's use of money creation. (C) The smoothing out of fluctuations in the market. (D) The price of the interest rate
The Cub Scouts have so far sold 100 tickets for their upcoming raffle, but they sell a constant additional 12 tickets every day. After three more days of selling tickets, the stock of tickets sold will be ________, and the flow of tickets sold will be ________.
A. 136; 12 B. 136; 36 C. 36; 12 D. 100; 36