When a commercial bank borrows from a Federal Reserve Bank, ________.
A. it indicates that the commercial bank is unsound financially
B. the supply of money automatically increases
C. the commercial bank's reserves are reduced
D. the commercial bank's lending ability is increased
Answer: D
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Which of the following is not a criticism of flexible exchange rates?
a. All of the following. b. They are volatile, which increases risks for importers and exporters. c. They could affect employment and increase demand for trade restrictions. d. They do not allow for discretionary monetary policy. e. They allow central banks to follow expansionary monetary policies.
If the unemployment rate rises, which policies would be appropriate to reduce it?
a. increase the money supply, increase taxes b. increase the money supply, cut taxes c. decrease the money supply, increase taxes d. decrease the money supply, cut taxes