Does the Fed have good control over the money supply?
a. Yes, open market operations generate exact changes in bank lending.
b. Yes, reserve requirements create new loans.
c. No, because of difficulties estimating the reserve ratio.
d. No, because of difficulties estimating the size of the excess reserves and cash holdings by the public.
d
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Adverse selection is a barrier to financing global growth because
A) of the differences between financing using loans, portfolio investment and foreign direct investment. B) if investors have trouble identifying high-risk firms they may be unwilling to lend funds to creditworthy firms. C) firms sometimes have trouble determining whether they need funds or not. D) there is the possibility that the funds are used for riskier behavior than the lender agreed to.
Failure to account for the increased transportation costs that would result from building fewer and more centrally located production facilities could result in firm managers selecting a scale of operation that is larger than the optimum
Indicate whether the statement is true or false
In the basic closed-economy ISLM model, the money market can be described by the
A) money demand function. B) money supply. C) money market equilibrium condition. D) all of the above.
Answer the following questions true (T) or false (F)
1. A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it. 2. Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important. 3. The iPod is a product without any significant network externalities.