Would the maximum loan that a bank can make be different when receiving a discount loan from the Federal Reserve of $1 million versus receiving a checking account deposit of $1 million? Explain why or why not
What will be an ideal response?
They are different. Both increase the reserves at the bank by $1 million, but the bank does not have to hold required reserves against the discount loan because it is not a deposit. The entire $1 million of the discount loan is excess reserves, which the bank can loan out.
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Indicate whether the statement is true or false
A decrease in the price level will
A) shift the aggregate demand curve to the right. B) move the economy down along a stationary aggregate demand curve. C) move the economy up along a stationary aggregate demand curve. D) shift the aggregate demand curve to the left.
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Indicate whether the statement is true or false
Which of the following constitutes a barrier limiting the entry of potential competitors into a market?
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