When the Fed decreases the legal reserve requirement, then the
a. banks must reduce the amount of loans they make
b. banks can increase the amount of loans they make
c. banks must reduce the interest rate they charge on loans they make
d. banks can increase the interest rate they charge on loans they make
e. banks must reduce the federal funds rate they charge to other banks
B
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________ are one source of involuntary unemployment during recessions
A) Downwardly rigid wages B) Lower corporate tax rates C) Flexible wages D) Higher income tax rates
The local banking industry currently has a Herfindahl-Hirschman index (HHI) value of 1945 and two of the competing banks have considered merging. Because the merger would raise the HHI by 155 points, the Federal Trade Commission would likely
A) challenge the merger. B) not challenge the merger. C) allow the merger as long as the HHI did not increase by more than 155 points as promised. D) allow the merger under the condition that the HHI remain at the premerger level of 1875.
The Herfindahl-Hirschman Index is a measure of market power that focuses on:
A) the ratio of the price of a firm's product to the price elasticity of demand for the product. B) the share of the market controlled by the X largest firms in the market. C) the sum of the squares of the market share of each firm in an industry. D) the difference between a firm's product price and its marginal costs of production.
If we knew that the price of goods rose, on average, by 5 percent last year and by 4 percent this year, we would know
a. nothing about the rate of inflation b. that the inflation rate is rising c. that the inflation rate is falling d. that we are in a stagflation e. that we are in a recession