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Author Question: The main policy-making organ of the Federal Reserve System is the A) Board of Governors. B) ... (Read 50 times)

Charlie

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on: Jun 29, 2018
The main policy-making organ of the Federal Reserve System is the
 
  A) Board of Governors.
  B) Federal Reserve Bank presidents.
  C) Federal Open Market Committee.
  D) Joint Congressional Committee on Monetary Policy.

Question 2

Explain the relationship between the real interest rate and the demand for loanable funds. Compare that relationship to the relationship between expected profit and the demand for loanable funds.
 
  What will be an ideal response?


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al

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Reply #1 on: Jun 29, 2018
Answer to Question 1

C

Answer to Question 2

The real interest rate determines the quantity of loanable funds demanded. There is an inverse relationship between the real interest rate and the quantity of loanable funds demanded. Expected profit affects investment and, because investment is a major source of the demand for loanable funds, the expected profit rate affects the demand for loanable funds. An increase in the expected profit from investing increases investment and thereby increases the demand for loanable funds. Hence there is a positive relationship between the demand for loanable funds and the expected profit rate.


Charlie

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

anyusername12131

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Reply 3 on: Yesterday
Excellent

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