The discount rate is the rate that the
A. Treasury pays on savings bonds.
B. Fed charges member banks.
C. Fed charges on government securities.
D. Fed charges the Treasury for sales of securities.
Answer: B
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When the economy is in a recession, ________ taxes decrease while ________ spending increases and, as a result of this automatic fiscal policy, aggregate demand ________
A) induced; discretionary; is not changed B) needs-tested; induced; decreases C) induced; needs-tested; increases D) discretionary; induced; is not changed E) discretionary; needs-tested; increases
The multiplier effect refers to the fact that a change in spending (aggregate demand) will
a. increase the money supply. b. cause prices to rise by some multiple of the initial increase in spending. c. cause nominal output to rise by some multiple of the initial increase in spending. d. reduce prices by some multiple of the increase in spending.
Based on the graph showing the effective federal funds rate, once interest rates bottomed out after the 2001 recession, they ______.
a. levelled off for several years
b. began an upward trend that is still ongoing
c. increased consistently for several years
d. went up slightly one year then dropped rapidly
Refer to the above graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by:
A. technological progress. B. full employment of resources. C. a decrease in the price level. D. allocative efficiency.