The concept of “lender of last resort” is that when
A. lending decreases, the Fed will be the last to resort to higher interest rates.
B. borrowing increases, the Fed will be the last to increase lending.
C. commercial banks are hesitant to lend, the Fed will step in and increase reserves.
D. a borrower has tried everyone else, the Fed will lend directly to them.
Answer: C
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Refer to Figure 5-8. Suppose the emissions reduction target is currently established at 8 million tons. Should society undertake to reduce an additional 1 million tons so that the total reduction is 9 million tons?
A) No, because there is a net cost represented by the area B + C. B) Yes, because toxic fumes are dangerous and must be eliminated at any cost. C) No, because the firms will pass the additional cost on to consumers. D) Yes, because the marginal benefit exceeds the marginal cost at 8 million tons.
_____ gives the slope of an isocost line where labor (L) and capital (K) are the two inputs measured on the X and Y axes respectively
a. The ratio of the marginal product of capital to the marginal product of labor, with a negative sign, b. The ratio of price of labor to the price of capital, with a negative sign, c. The ratio of the price of capital to the price of labor d. The ratio of the marginal product of labor to the marginal product of capital