Describe the role of the Federal Deposit Insurance Corporation (FDIC)
The FDIC is the primary mechanism by which the federal government guarantees the safety of deposits at most banks. The existence of the FDIC increases the stability of the banking system by significantly decreasing the likelihood of bank runs.
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Refer to the above figure. Line EBD is called
A) the saving function. B) the consumption function. C) the 45-degree line. D) aggregate demand.
The direction of change in the trade balance is uncertain because expansionary monetary policy may exert forces in the opposite direction. What are they?
A) An increase in income tends to lower the trade balance, whereas a fall in interest rates through depreciation tends to raise the trade balance. B) An increase in the supply of money raises interest rates, which lowers the trade balance, whereas the increase in the demand for money raises it. C) Exchange rates rise (depreciation) and expected exchange rates fall (appreciation). D) An increase in financial assets raises foreign inflows and raises the trade balance, whereas decreases in interest rates lower the trade balance.