Explain the concept of externality and give an example

During a recession, unemployment compensation payments increase without the need for any government action. This increase is an example of

A) discretionary monetary policy. B) automatic monetary policy. C) automatic fiscal policy. D) discretionary fiscal policy. E) government expenditure, but it is not an example of either discretionary or automatic policy.

Reserves that the Fed injects into the banking system are ultimately

a. converted into loans that banks make to other banks b. distributed among different banks in the system as required reserves c. end up in just two or three banks d. ineffective at increasing money supply e. important to banks that want more customers