When the Fed raises the discount rate, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
b
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When the Fed lowers the federal funds rate, it can lead to
A) the Fed selling government securities. B) an increase in lending by banks. C) a decrease in demand deposits. D) a decrease in the quantity of money.
Increasing opportunity cost along a bowed-out production possibilities frontier occurs because
A) of inefficient production. B) of the scarcity of factors of production. C) of ineffective management by entrepreneurs. D) some factors of production are not equally suited to producing both goods or services.