Among the prospective rules that set target variables directly, only the nominal GDP rule
A) provides a nominal anchor.
B) is easy for the Fed to achieve.
C) allows a neutral response to a supply shock.
D) is insulated from the effects of unstable velocity.
C
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As long as a bank's stockholders' equity is greater than zero:
A) the stockholders in the bank bear all the risk involved. B) the customers of the bank bear all the risk involved. C) the bank bears all the risk involved. D) bank runs are not possible.
One of the impacts of maturity transformation is that:
A) relatively liquid assets become relatively illiquid. B) it decreases the rate of inflation. C) it increases the rate of inflation. D) relatively illiquid assets become relatively liquid.
Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?
A) Q0 B) Q1 C) Q2 D) Q2 - Q0
Other things constant, if the Fed decreased the discount rate,
a. the earnings of the Fed would increase. b. the incentive of commercial banks to borrow from the Fed would be reduced. c. borrowing from the Fed will tend to increase and the money supply will tend to expand. d. borrowing from the Fed will tend to decrease and the money supply will tend to decline.