The Fed seeks to promote stability of financial markets because
a. they want to lift the self-esteem of workers
b. Congress directed them to do so by the Employment Act of 1946.
c. resources are lost when there is not an efficient matching of savers and borrowers.
d. unstable markets result in increased efficiency.
c. resources are lost when there is not an efficient matching of savers and borrowers.
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The ________ problem helps to explain why the private production and sale of information cannot eliminate ________
A) free-rider; adverse selection B) free-rider; moral hazard C) principal-agent; adverse selection D) principal-agent; moral hazard
If two bundles are on the same indifference curve, then
A) the consumer derives the same level of utility from each. B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. C) no comparison can be made between the two bundles since utility cannot really be measured. D) B and C.
A risk-preferring person is willing to pay
A) a risk premium. B) a fee to make a fair bet. C) to obtain decreasing marginal utility. D) None of the above.
Which of the following is the largest component of the assets of the Federal Reserve?
a. U.S. Treasury deposits b. U.S. government securities c. Foreign exchange d. Time deposits e. Checkable deposits