5-2 (48-50) Question 48. 48. If the discount rate is raised then banks borrow (P

Question

5-2 (48-50)

Question 48. 48. If the discount rate is raised then banks borrow (Points : 5) more from the Fed so reserves increase. more from the Fed so reserves decrease. less from the Fed so reserves increase. less from the Fed so reserves decrease.

Question 49. 49. In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then (Points : 5) M1 would increase. M1 would decrease. M1 would not change. M1 might rise or fall.

Question 50. 50. Which of the following is a function of money? (Points : 5) a unit of account a store of value medium of exchange All of the above are correct.

Explanation / Answer

Answers:

48. If the discount rate is raised then banks borrow

(c) less from the Fed so reserves increase.

49. In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then

(c) M1 would not change.

50. Which of the following is a function of money?

(d) All of the above are correct.

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