The Federal Reserve cut the federal funds rate seven times between September 2007 and March 2008. What event led the Fed to make these reductions in the federal funds rate?
A) The chairman of the Federal Reserve System persuaded members of the Federal Open Market Committee to lower interest rates in order to reduce the price of oil in international markets.
B) It was in response to reductions in the discount rate, which was also lowered seven times over the same time period.
C) Several large investment banks failed during this time period.
D) During this period there was a substantial reduction in the demand for housing.
D
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
A problem associated with import substitution as an industrial policy is:
A. it removes the incentive for industries to be efficient. B. industries are often chosen for political, not economic, reasons. C. it often stays in place long after it was expected to lapse. D. All of these are problems associated with import substitution policy.
If the rivers, lakes and air in the United States could all be privately owned, then: a. there would be less pollution
b. costs of production for many firms would rise. c. externalities would be internalized. d. all of the above are correct.
Which of the following statements represents the idea behind signaling in education?
a. Education can turn an unproductive person into a productive person. b. Education increases the marginal productivity of naturally productive workers. c. More productive people are more inclined to educate themselves. d. All of the above are correct.