In recent years, the Fed has generally set the discount rate
a. lower than the federal funds rate to help financially troubled banks get more solvent.
b. higher than the interest rate on 30-year fixed-rate mortgage loans.
c. higher than the federal funds rate for most banks.
d. equal to the rate of inflation.
C
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The above figure shows the market for oil. Because of the development of a new deep sea drilling technology the
A) demand curve shifts from D1 to D2 and the supply curve does not shift. B) demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2. C) demand curve does not shift, and the supply curve shifts from S2 to S1. D) demand curve does not shift, and the supply curve shifts from S1 to S2.
In the short-run macro model, if GDP is $5 trillion and aggregate expenditure is $4 trillion,
a. GDP will rise because inventories will rise b. GDP will fall because inventories will fall c. GDP will remain the same because this is an equilibrium d. investment will decrease e. the government will have to increase taxes