When the Fed lowers the discount rate, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
a
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Which of the following is the largest component of national income?
A) net interest B) compensation of employees by firms C) corporate profits D) rental income
Real business cycle theory emphasizes that shocks to technology can play a big part in causing economic fluctuations
Indicate whether the statement is true or false