Discuss why the Fed rarely changes the reserve requirements
There are two main reasons the Fed does not often change reserve requirements:
1) Changing reserve requirements can potentially alter bank's lending behavior.
2) Changing reserve requirements might be less effective than other policy tools because banks hold excess reserves.
You might also like to view...
In a second-price sealed-bid auction, ________
A) bidders submit their bids privately B) bidders place their bids one after another C) bidders know each other's bid D) bidders bid above their willingness to pay
Which of the following is cited as a problem with the kinked demand curve model?
A) It assumes that firms do not attempt to maximize profits. B) It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost. C) It does not explain how the equilibrium market price is determined. D) It does not explain the price stickiness that is routinely observed in oligopolistic markets.
In the short run, the competitive firm will hire more labor if
A) the wage rate increases. B) the price the firm receives for the output increases. C) the price the firm receives for the output decreases. D) a specific tax is imposed on the output.
An American computer is priced at $1,200. If the exchange rate between the U.S. dollar and the Japanese yen is $0.01 per yen, the equivalent price of the computer in yen is approximately __________ yen
A) 12,000 B) 12 C) 1,200,000 D) 120,000