In 2002, the Federal Reserve changed its discount lending procedures. Which of the following statements is correct?
A. The Fed now controls the quantity of credit extended as well as its price.
B. For most of its history the Federal Reserve has lent reserve to banks at a rate equal to the target federal funds rate; after 2002 the rate would be below the target federal funds rate.
C. The changes made in 2002 have made it more difficult for the Fed to meet its interest-rate stability objective.
D. Before 2002 the Fed discouraged banks from borrowing and actually created volatility in the market for reserves.
Answer: D
You might also like to view...
A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier
Indicate whether the statement is true or false
Assume the price of Coca-Cola increases. As a result, your real income decreases and you decrease the quantity of Coca-Cola purchased each month. This is an example of the:
a. income effect. b. consumer price effect. c. revenue effect. d. substitution effect.
Executive board members of the European System of Central Banks are appointed by:
A. a committee made up of heads of state of member countries. B. a committee made up of bank presidents in the member countries. C. the finance ministers of member countries. D. the directors of the National Central Banks.
All of the following are examples of natural monopolies except
A. College bookstores. B. Electricity companies. C. Railroad companies. D. Local telephone companies.