Commercial banks create money when they:
A. accept cash deposits from the public.
B. purchase government securities from the central banks.
C. create checkable deposits in exchange for IOUs.
D. raise their interest rates.
C. create checkable deposits in exchange for IOUs.
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When land across the mountains became available in the early nineteenth century,
(a) much of New England was simply abandoned by people primarily interested in farming. (b) live-stock raising, dairying and lumbering kept rural New England from being totally abandoned. (c) very few New England farmers elected to stay in New England. (d) Manufacturing quickly replaced New England farming.
If the Fed buys a T-bill from an individual rather than from a bank, the effect on the money supply is
a. smaller because there is no multiplier process. b. larger because of the multiplier process. c. the same. d. impossible to predict without knowing the value of the multiplier.