If the Fed decreases the discount? rate, relative to the federal funds? rate, then this
a. would cause the money supply to decrease.
b. would cause the required reserve ratio to increase.
c. would decrease the cost of funds for institutions borrowing from the Fed.
d. would increase the cost of funds for institutions borrowing from the Fed.
Answer: c. would decrease the cost of funds for institutions borrowing from the Fed.
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Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A's reserves immediately increase by
A) $2,000. B) $8,000. C) $10,000. D) $50,000.
If one nation is able to produce a good at a lower opportunity cost than another, it has
A) an absolute advantage in that good. B) a comparative advantage in that good. C) a productivity advantage in that good. D) a technological advantage in that good. E) no reason to want to trade that good.