If the Federal Reserve raises the discount rate, banks will be inclined to borrow additional reserves and the money supply will increase
Indicate whether the statement is true or false
FALSE
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A decrease in the federal funds rate
A) increases other short-term interest rates, decreases investment, and decreases aggregate demand. B) lowers the exchange rate, increases the supply of loanable funds, and increases aggregate demand. C) lowers other sort-term interest rate, raises the real interest rate, and increases aggregate demand. D) decreases the supply of loanable funds, raises the real interest rate, and decreases aggregate demand. E) decreases the demand for loanable funds, lowers the real interest rate, and decreases aggregate demand.
Debt service
A) is rarely an issue for high-income countries. B) always makes a country worse off for having borrowed. C) is a problem when the amount of debt is small relative to the size of the economy. D) tends to benefit low- and middle-income countries at the expense of high-income countries.
An effective program used to fight transient poverty is:
A. unemployment insurance. B. health insurance. C. job training. D. All of these are effective at fighting transient poverty.
The infant industry argument for protection is rejected by most economists because:
A. historical experience supports it. B. they oppose any government intervention. C. protection usually is provided only temporarily. D. many infant industries become reliant on protection and do not mature.