A lower discount rate discourages banks from borrowing reserves and making loans. Therefore, if the Fed wants to expand the money supply, it raises the discount rate
a. True
b. False
Indicate whether the statement is true or false
False
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Economic theory suggests that college graduates receive higher wages than those with only a high school education because
a. college graduates are more productive. b. college graduates must be paid higher wages because their educational costs were higher. c. college graduates have formed stronger unions. d. the supply of high school graduates is small relative to the demand for their labor.
Real estate is defined as land and its permanent improvements. Which of the following is an example of an improvement to the land?
A. Fence B. Building C. Sewer system D. Personal property
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and reserve-related (central bank) transactions remain the same. b. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate rises, and reserve-related (central bank) transactions remain the same. d. There is not enough information to determine what happens to these two macroeconomic variables. e. The real risk-free interest rate rises, and reserve-related (central bank) transactions become more positive (or less negative).
Why does the government work to eliminate artificial barriers to entry?
What will be an ideal response?