If the federal funds rate falls below the discount rate, banks will decrease their borrowings from __________ and __________ their borrowings from __________. It follows that when one bank borrows from __________, reserves in the banking system __________
A) other banks; increase; the Fed; another bank; remain unchanged
B) the Fed; decrease; other banks; another bank; remain unchanged
C) other banks; increase; the U.S. Treasury; the Treasury; increase
D) the Fed; increase; other banks; another bank; remain unchanged
E) none of the above
D
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Suppose that the United Kingdom pegs the pound to the euro and the European Central Bank decides to use monetary policy to offset the possible inflationary effects of European expansionary fiscal policy. How would the European Central Bank's monetary policy affect European interest rates?
A) They would rise. B) They would fall. C) The combination of the expansionary fiscal policy and the monetary policy would cause interest rates to return to their level prior to the expansionary fiscal policy. D) The combination of the expansionary fiscal policy and the monetary policy would not affect interest rates.
Wealth consists ultimately of
A) gold. B) land. C) money. D) whatever people value.