As the federal funds rate rises, the banks’ opportunity cost of holding excess reserves falls.
Answer the following statement true (T) or false (F)
False
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To contract the money supply, the Fed should
A) lower the required reserve ratio. B) increase government spending and cut taxes. C) reduce the differential between the discount rate and the federal funds rate. D) sell U.S. government securities.
The __________________ traces the flow of money, resources, and goods and services through the economy.
Fill in the blank(s) with the appropriate word(s).
The Fed can influence the money supply by
a. changing how much it lends to banks. b. changing the interest rate it pays banks on the reserves they are holding. c. using open-market operations. d. All of the above are correct.
When the MPP of labor is zero, ceteris paribus,
A. Additional units of labor must be employed because other factors of production are being wasted. B. No further increases in output can be achieved by using additional units of labor. C. Employment can be increased only by offering a higher wage rate. D. MRP is at a maximum.