Which of the following actions by the Fed would lead to an increase in the money supply?
A) an increase in the differential between the discount rate and the federal funds rate
B) an increase in the required reserve ratio
C) an increase in tax rates
D) the purchase of government securities
D
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The only lasting solution to the welfare problem will have to come from welfare reform alone
Indicate whether the statement is true or false
On average, if demand is unknown and costs of underpricing are _______ than the costs of overpricing, then err on the side of_________
a. Smaller; overpricing b. Smaller; underpricing c. Larger; underpricing d. None of the above
Who is considered to be a free rider according to economists?
If the market price of an option just before its expiration is $33 while its strike price is $29, arbitrage will determine a price for it that:
a. leaves an investor indifferent between buying the stock outright or buying an option and then exercising it. b. encourages the investor to buy the stock outright and sell it when the option expires. c. encourages the investor to buy an option and exercise it only after its expiration. d. encourages the investor to buy the stock outright and rewrite an option later.