ow does lowering the discount rate enable the Fed to stimulate the economy? How does raising the discount rate enable the Fed to control too robust an economy?
What will be an ideal response?
The Fed lowers the discount rate on loans to banks to stimulate the economy by making it easier for banks to obtain additional reserves. The banks can then lend this money out to businesses, thereby stimulating the economy by adding funds into the economy. When the economy is too robust, the Fed can increase the discount rate, making it harder for banks to get loans. Businesses are then discouraged from taking out loans at the higher interest rate, thereby slowing the addition of funds to the economy.
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With technological developments, more resources are discovered which change production sets for countries and make world trade more and more beneficial
Indicate whether the statement is true or false
In high schools, all teachers were paid the same based on years of service and regardless of specialization. Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer. At the same time, a decline in the number of school-age children tended to reduce the demand for all other teachers, which led to a
surplus. The economist's solution to this problem would be a. merit pay to reward the best teachers. b. recognition that all teachers do comparable work and should be paid the same. c. to raise the wages of all teachers. d. to raise the wages of teachers in fields that are in short supply and lower those of others.
Money is:
A. controlled by the supply and demand of goods and services on which our money is spent. B. represented only by the amount of dollars and coins in our economy. C. the set of all assets that are regularly used to directly purchase goods and services. D. anything that we use to buy goods and services as long as it is not a good itself.
Which of the following will not cause a shift in the demand for resource X?
A. an increase in the productivity of resource X B. a decrease in the price of substitute resource Y C. an increase in the price of the product resource X is producing D. a decline in the price of resource X