If the Fed decreases the discount? rate, relative to the federal funds? rate, then this
a. would cause the money supply to decrease.
b. would cause the required reserve ratio to increase.
c. would decrease the cost of funds for institutions borrowing from the Fed.
d. would increase the cost of funds for institutions borrowing from the Fed.
Answer: c. would decrease the cost of funds for institutions borrowing from the Fed.
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The legal system based on common law derives from the experience of which country?
A) France B) England C) Germany D) Rome
Half of all your potential customers would pay $16 for your product but the other half would only pay $10 . You cannot tell them apart. Your marginal costs are $4 . If you set the price at $16, the expected profit is:
a. $3 b. $4 c. $5 d. $6
Anthony Downs, in The Economic Theory of Democracy, argues that voters choose to remain "rationally ignorant" when they vote in elections, knowing relatively little about the candidates or the issues. What economic principle would you invoke to explain this behavior?
a. public good theory b. moral hazard c. the cost of information d. risk aversion
When monetary policy becomes highly politicized, the policy tends to:
A. Become more effective at stabilizing the economy B. Lose any effect at all on the economy C. Become destabilizing, instead of promoting stability D. Lead to rising budget surpluses