A repurchase agreement of government securities by the Fed
A) permanently increases bank reserves.
B) temporarily increases bank reserves.
C) permanently reduces bank reserves.
D) temporarily reduces bank reserves.
D
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If consumer preference for a product increases, this will cause the equilibrium price of the product to go down, and the equilibrium quantity of the product to go u
Indicate whether the statement is true or false
If people held all their money as cash:
A. money would lose its value as a store of wealth. B. money would no longer be a financial liability of the Fed. C. banks could not create money. D. banks would still be able to create money by making loans.
Answer the following statements true (T) or false (F)
1) When commercial banks retire outstanding loans, the supply of money is increased. 2) Commercial banks monetize claims when they sell securities to Federal Reserve Banks. 3) The banking system can lend by a multiple of its excess reserves because lending does not result in a loss of reserves to the banking system as a whole. 4) The monetary multiplier and the spending multiplier are two ways of referring to the same concept.
Suppose that air traffic controllers, whose wages have been locked into place by a two-year contract, are laid off during a recession. This example is consistent with the
A. efficiency wage explanation of unemployment. B. explicit contract explanation of unemployment. C. relative-wage explanation of unemployment. D. social contract explanation of unemployment.