When the Fed raises the discount rate, it
a. lowers the cost of borrowing from the Fed, allowing banks to make more loans
b. raises the cost of borrowing from the Fed, disallowing banks from making the same quantity of loans
c. increases the amount of excess reserves that banks hold, allowing them to make more loans
d. increases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans
e. decreases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans
B
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Which of the following is true of Carter administration?
a. Dramatic expansion of Social Security and Medicare programs b. Large income tax cuts, especially for the wealthy c. Deregulation of airlines, trucking, railroads and the financial services industry d. Government control of gasoline and food prices
The law of demand states that the quantity demanded of a good and
a. the price of a substitute are positively related b. its price are inversely related c. its price are positively related if it is an inferior good d. the wealth of buyers are positively related e. its price are inversely related if it is a normal good