If both borrowers and lenders become discouraged by difficult-to-predict inflation:
A. it will become more difficult for financial intermediation to generate and coordinate savings with investment.
B. the excess supply of loanable funds will drive real interest rates higher and higher.
C. the velocity of money will increase, leading to higher unemployment and lower real GDP.
D. the federal reserve will have to respond by sharply increasing the money supply.
Ans: A. it will become more difficult for financial intermediation to generate and coordinate savings with investment.
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The discount rate is
A) the interest rate paid when a bank borrows reserves from another bank. B) the interest rate paid when a commercial bank borrows reserves from the Fed. C) the reduction in the interest rate given to the bank's best customers. D) another name for the long-term interest rate. E) the interest rate the Fed pays banks for the reserves the banks keep at the Fed.
Barter transactions involve a double coincidence of wants
a. True b. False Indicate whether the statement is true or false