If the economy were encountering a severe recession, proper monetary and fiscal policies would call for:
A. selling government securities, raising the reserve ratio, lowering the discount rate,
increasing interest paid on reserves held at Fed banks, and a budgetary surplus.
B. buying government securities, reducing the reserve ratio, reducing the discount rate,
reducing interest paid on reserves held at Fed banks, and a budgetary deficit.
C. buying government securities, raising the reserve ratio, raising the discount rate, reducing
interest paid on reserves held at Fed banks, and a budgetary surplus.
D. buying government securities, reducing the reserve ratio, raising the discount rate,
reducing interest paid on reserves held at Fed banks, and a budgetary deficit.
B. buying government securities, reducing the reserve ratio, reducing the discount rate,
reducing interest paid on reserves held at Fed banks, and a budgetary deficit.
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Assume that a consumer can spend $20 on two goods–pens and pencils. If the price of one pen is $5 and the price of one pencil is $2, which of the following combinations of the two goods represents a point on the consumers budget constraint?
A) 3 pens and 2 pencils B) 1 pen and 10 pencils C) 2 pens and 5 pencils D) 2 pens and 3 pencils
The primary function of the reserve requirements imposed by the Fed upon commercial banks is to
A) assure that Federal Reserve Banks will receive deposits with which they can purchase income-earning assets. B) enable the government to borrow in emergencies. C) protect the liquidity of the banking and monetary system. D) protect the solvency of the commercial banking system. E) serve as a control lever for central banking authorities.