During a period of inflation, the Fed is likely to:
a. sell government securities to banks in order to reduce the amount of loanable funds.
b. buy government securities from banks in order to reduce the amount of loanable funds.
c. raise taxes in order to reduce the money supply.
d. cut the required reserve ratio in order to reduce the amount of excess reserves banks have to loan out.
e. cut the discount rate in order to increase the affordability of loanable funds.
a
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Refer to Figure 10.7. A movement from point D to point C could be caused by
A) a positive demand shock. B) an increase in the term premium investors expect in the future. C) an increase in the term structure effect. D) an increase in the expected rate of inflation.
As means of payment currency, credit cards, and debit cards differ according to
A) whether they pay interest. B) whose liability they represent. C) transactions costs. D) all of the above.