Regulation Q was intended to
A) maintain banks' profitability by limiting competition for funds.
B) increase the reserves banks would hold against demand deposits.
C) increase the reserves banks would hold against time deposits.
D) eliminate the need for discount loans.
A
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Which of the following policy actions by the Fed would cause the money supply to decrease?
a. An open market purchase of government securities. b. A decrease in required reserve ratios. c. A decrease in the discount rate. d. An open-market sale of government securities.
A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:
A. c(Q/I). B. -b(I/Q). C. Q/(cI). D. c(I/Q).
If a good generates an external cost, the market will produce
a. some of the good but not enough b. too much of the good. c. an optimal amount of the good. d. none of the good.
A price ceiling means that:
A. there is currently a surplus of the relevant product. B. government is imposing a legal price that is typically below the equilibrium price. C. government wants to stop a deflationary spiral. D. government is imposing a legal price that is typically above the equilibrium price.