When the Federal Reserve raises the federal funds rate, the quantity of reserves ________, the quantity of money ________, and the quantity of loans ________
A) increases; increases; increases
B) decreases; decreases; decreases
C) increases; increases; decreases
D) decreases; decreases; does not change
E) decreases; does not change; does not change
B
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At Tony's Car Wash, a team of four workers washes and rinses each car by hand, and one worker dries the car by hand. Which of the following is true?
a. Tony will have no principal-agent problems. b. Tony will have more principal-agent problems in washing and rinsing than in drying the cars. c. Tony will have more principal-agent problems in drying than in washing and rinsing the cars. d. Tony will be awash in severe principal-agent problems. e. Tony will have no incentive to monitor the car wash.
An insurance company that writes automobile policies tries to separate safe drivers from risky drivers by offering policies that feature different deductibles and different premiums. This practice is best described as an example of
a. screening. b. behavioral economics. c. monitoring. d. signaling.