Raising the discount rate is: a a contractionary policy on the part of the membe
ID: 1121472 • Letter: R
Question
Raising the discount rate is: a a contractionary policy on the part of the member banks of the Fed because it raises the firms' costs of borrowing from them. policy on the part of the Fed because it raises the commercial banks' cost of borrowing from it c. an expansionary policy on the part of the Fed because increasing the interest rates that the banks are allowed to charge will increase their willingness to make loans. d. an expansionary policy because it raises the ratio of excess reserves to total reserves in the banking system. e.an expansionary policy on the part of the member banks of the Fed because it raises their profits relative to those of QUESTION 24 1 point An example of a positive externality is a cigarette smoking because this imposes an indirect cost on people around the smoker b. a homeowner's maintenance of a beautiful lawn because it creates a benefit for neighbors. c. pollution by firms because it affects people who are not directly involved with producing it. d. driving a car that emits smoke. creation. QUESTION 25 1 points Whatever serves as a medium of exchange is a. considered money as long as it is not also legal tender b. generally accepted in return for goods and services. c.considered money as long as it is the most widely used currency d.considered money as long as it is also the best such medium of exchange available. money unless it continues to be backed by its issuing institution. to save allExplanation / Answer
23. Raising the discount rate would mean now banks will have to pay higher interest on their loans from Fed which will make them borrow less. Consequently, the money supply would fall. Hence, it's a contractionary monetary policy.
OPTION B
24. OPTION B
25. OPTION B
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