When the Fed sells government securities, it:
A. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
B. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
C. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
D. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
Answer: C
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Which of the following is the best definition of economic growth?
A) the opportunity cost of capital B) the sustained expansion of production possibilities C) the investment in capital and consumption goods by an economy D) increased development of land and entrepreneurship E) the opportunity cost of consumption
Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?
What will be an ideal response?
An example of how economic growth might not lead to economic development is:
A. the average income in a nation increased with greater GDP growth. B. when a nation's economy grew, the rate of malnutrition among children was relatively constant. C. the rate of literacy increased among all groups when a nation's economy grew. D. people had greater social mobility due to the growth experienced in the nation.
The Coase theorem will hold only if:
A. people can make enforceable agreements. B. there are no transactions costs. C. Both of these must hold true. D. Neither of these must hold true.