If the Fed increased the discount rate,
a. banks would make more loans
b. the money supply would increase
c. firms would be more likely to seek out loans
d. the required reserve ratio would increase
e. banks would make fewer loans
E
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The theories of economics, with surprisingly few exceptions, are extensions of which of the following assumptions about people?
A) People will do whatever earns them the most money. B) People will do whatever helps them to be "one up" on others. C) People will do whatever makes them popular. D) People will do whatever most effectively promotes the common good. E) People will do whatever yields them the largest net benefit.
The graph above shows the relationship between consumption and income. Which of the following statements is correct?
A. The marginal propensity to consume in the economy shown is greater than 1
B. The marginal propensity to consume varies across income levels
C. The average propensity to consume at income level K is given by KM divided by KN
D. The marginal propensity to consume can be calculated by dividing LM by 0K