The federal funds market is the market where
a. the federal government borrows money from banks to finance the national debt
b. the federal government lends money to commercial banks
c. banks borrow from and lend to each other for short periods of time
d. banks borrow money from the Fed for short periods of time
e. banks buy bonds from the Treasury for long periods of time, typically 10-year bonds
C
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Research shows that when exchange rates are more volatile, the price differentials are ____ and the convergence is _____.
A) smaller; faster B) smaller; slower C) larger; slower D) larger; faster
Under the assumptions of the new Keynesian model, an increase in aggregate demand will
A) increase prices and output in the short-run. B) lead to a decrease in unemployment and an increase in prices in the short run. C) lead to an increase in the nominal wage rate in the long run and a decrease in unemployment in the short run. D) All of the above are correct.