Credit cards are not part of the nation's money supply
Indicate whether the statement is true or false
TRUE
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The aggregate demand curve shows the relationship between inflation and:
A. short-run equilibrium output. B. the real interest rate. C. the exchange rate. D. the nominal interest rate.
Suppose that, for every 1 percentage point decline in the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve Banks. Also assume that the reserve requirement is 10%. If the Fed lowers the discount rate from 4.0% to 3.5%, bank reserves will ________.
A. increase by $1 billion and the money supply will increase by $10 billion B. decline by $1 billion and the money supply will decline by $10 billion C. increase by $1 billion and the money supply will increase by $5 billion D. increase by $10 billion and the money supply will increase by $100 billion
Bad risks may be the most willing to pay high interest rates and thus get loans. This describes an example of
a. symmetrical information b. adverse selection c. natural selection d. moral hazard e. the winner's curse
As unemployment rose during 1930 through 1932 and the economy plunged into the Great Depression, policy makers
a. reduced tax rates and increased the money supply. b. increased tax rates and reduced the money supply. c. increased both tax rates and the money supply. d. reduced both the tax rates and the money supply.