In the United States saving is allocated to its most productive use by:
A. the federal, state, and local governments.
B. the Federal Reserve.
C. a decentralized, market-oriented financial system.
D. regulations and laws designed to improve productivity.
Answer: C
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The main goals of monetary policy include all of the following EXCEPT
A) attaining the maximum sustainable growth of potential GDP. B) keeping the unemployment rate close to the natural unemployment rate. C) keeping the long term nominal interest rate equal to the real interest rate plus the inflation rate. D) keeping the inflation rate low. E) keeping the long-term interest rate at a moderate level.
Which of the following best describes how banks create money?
A) Banks charge higher interest rates on loans than they pay on deposits. B) Banks charge fees for providing financial advice. C) Banks make loans from reserves. D) Banks create checking account deposits when making loans from excess reserves.