Suppose a policy change will generate $100,000 of benefits for low-income families and $120,000 of costs for high-income families. This change can best be described as
A. Pareto efficient.
B. equitable.
C. potentially efficient.
D. inefficient.
Answer: D
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The lending facility that allows any bank to borrow reserves from the Fed is called the:
A. discount window. B. reserve window. C. reserve rate. D. borrower of last resort.
The three main monetary policy instruments are
A. the money supply, the market interest rate, deposit insurance B. open market operations, reserve requirement ratio, the discount rate C. open market operations, deposit insurance, the money supply D. open market operations, reserve requirement ratio, the market interest rate
The reserves supply schedule has a positive slope because
A. the Fed lowers the discount rate as interest rates rise. B. the Fed makes more money available at higher interest rates. C. as interest rates rise, banks will find loans more profitable. D. as interest rates rise, people will demand more loans.
Respond to the following: "If it takes a significant period of time to uncover accounting manipulations by individuals in a major corporation, honesty may be the best policy but dishonesty can be a lot more profitable!"
What will be an ideal response?