Lowering the discount rate:
a. encourages banks to borrow from the Fed, and they can more easily accommodate their customers' needs for loans.
b. encourages business customers to borrow directly from the Fed
c. reduces the amount of reserves banks are required to keep.
d. automatically reduces excess reserves.
e. encourages banks to sell U.S. government securities and increase their cash reserves.
a
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Briefly describe why taxes create deadweight loss
Reducing the maximum LTV is likely to ________ demand and thus ________ the housing price increase
A) decrease; slow down B) increase; slow down C) decrease; speed up D) increase; speed up
As distinct from reductions in the price level, reductions in the rate of inflation are referred to as:
A. dollar depreciation. B. stagflation. C. deflation. D. disinflation.
According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs.
A. trade and specialization B. exchange and consumption C. economic growth D. investment in capital goods