Which of the following is likely to happen to the demand curve for reserves if the federal funds rate increases?
A) The demand curve for reserves will shift to the right.
B) The demand curve for reserves will shift to the left.
C) There will be an upward movement along the demand curve for reserves.
D) There will be a downward movement along the demand curve for reserves.
C
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The Federal Reserve can influence the exchange rate by
A) changing interest rates. B) buying or selling dollars. C) Both answers A and B are correct. D) None of the above answers is correct.
Which of the following statements is true about profits in a monopolistically competitive market?
(A) Monopolistically competitive firms are as profitable as monopoly firms. (B) Profits are rare in monopolistically competitive markets. (C) Most firms will earn substantial profits from year to year. (D) Many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term.