When the Fed decreases the discount rate, it makes it easier for banks
a. to decrease their reserves by borrowing from the Fed, causing the money supply to shrink
b. to increase their reserves by borrowing from the Fed, causing the money supply to grow
c. to protect against the inevitable accompanying increase in the legal reserve requirement
d. to convert its loans into deposits
e. to write off its obligations to the Fed
B
You might also like to view...
The time consistency problem implies that
A) the central bank should not commit. B) central bank commitment is useful. C) discretion is better than tying your hands. D) there are problems we cannot solve.
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
a. cause foreign producers to be better off, because the price they charge is now higher by $1 per box. b. cause domestic producers to be worse off by $5 per box. c. make domestic consumers worse off as they would be paying $1 more than the domestic price. d. make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price. e. cause domestic producers to be worse off by $10 per box.
Paul Samuelson is immensely famous among economists for having established the supply-side school of economics
Indicate whether the statement is true or false
Monetary policy under a fixed exchange-rate regime will be
A. more effective than fiscal policy. B. more powerful with high capital mobility than with low capital mobility. C. constrained and relatively ineffective. D. likely to cause large and persistent deficits.