Which of the following is an appropriate monetary policy if the Fed wants to increase the money supply?
A. an increase in the required reserve ratio
B. an increase in the discount rate
C. purchases of bonds in open market operations
D. an increase in taxes on interest income
Answer: C
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The Law of Supply states
A) that supply curves slope upward. B) that supply curves can be vertical or horizontal. C) Both A and B. D) None of the above.
As the Fed increased the volume of loans to financial institutions in response to the 2008 financial crisis, this resulted in
a. a vast increase in the monetary base and the excess reserves of the commercial banking system. b. a substantial increase in short term interest rates. c. a sharp decrease in the monetary base and a contraction in the excess reserves of the commercial banking system. d. an increase in the volume of loans extended by commercial banks and a sharp increase in the inflation rate.
What would happen in the market for loanable funds if the government were to increase the tax on interest income?
a. The supply of loanable funds would shift right. b. The demand for loanable funds would shift right. c. The supply of loanable funds would shift left. d. The demand for loanable funds would shift left.
The prices of goods at a grocery store are listed in dollars. Which function of money does this illustrate?