ary monetary policy most effective? 13. In which of the following situations is
ID: 1128463 • Letter: A
Question
ary monetary policy most effective? 13. In which of the following situations is expansion A The Fed prints more currency. B. The Fed raises the discount rate and the reserve requirement. C. The Fed sells more securities. D. Banks are willing to lend excess reserves. 14. When the money market is in equilibrium in the liquidity trap A. An increase in the money supply does not affect interest rates. B. The demand for money is perfectly insensitive to interest rates. C. Investment spending falls to zero. D. There is no speculative demand for money 15. Banks and customers are most likely to be reluctant to use the full lending capacity made available by the Federal Reserve when the economy experiences A. Growth and low interest rates. B. Growth and inflation rates higher than the interest rate. C. High inflation rates. D. A deep recession. 16. The equation of exchange can be stated as A. MV PQ. B. PV = MQ. C. MP-VQ. 17. According to monetarists, the aggregate supply curve is A. Upward-sloping to the right. B. Vertical at the natural rate of unemployment. C. Flat until full employment is reached. D. Flat.Explanation / Answer
Ans:
13) Option D
Banks are willing to lend excess reserves
When banks lend their excess reserves it will increase money supply and will act as complements to Fed action.Thus result in successful monetary policy.
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