Suppose the Fed makes a $5 million discount loan to a bank. Illustrate how this affects the balance sheets of the Fed and the banking system
What will be an ideal response?
The Fed's assets increase as discount loans rise by $5 million and its liabilities increase by $5 million as reserves increase. The banking system's assets increase as reserves rise by $5 million and its liabilities increase by $5 million due to the increase in discount loans.
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Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic. If the federal government eliminated the 18.4 cents per gallon gasoline tax, the price paid by buyers would
A) decrease by less than 18.4 cents. B) decrease by 18.4 cents. C) decrease by more than 18.4 cents. D) stay the same. E) increase by 18.4 cents.
The marginal propensity to consume is the proportion of each new dollar's worth of income that is spent
Indicate whether the statement is true or false
One of the essential functions a bank performs is that of
A. Participating in the stock market. B. Purchasing government bonds. C. Creating money by lending required reserves. D. Transferring money from savers to borrowers.
Oligopolies can be characterized as a strategic game among rival companies.
Answer the following statement true (T) or false (F)