This topic contains a solution. Click here to go to the answer

Author Question: Would the maximum loan that a bank can make be different when receiving a discount loan from the ... (Read 95 times)

cool

  • Hero Member
  • *****
  • Posts: 570
Would the maximum loan that a bank can make be different when receiving a discount loan from the Federal Reserve of 1 million versus receiving a checking account deposit of 1 million? Explain why or why not.
 
  What will be an ideal response?

Question 2

One criticism of the Fed's policy of forward guidance during the recession of 2007-2009 is that it contributed to a prolonged period of abnormally low interest rates, leading to speculative bubbles in stocks or other financial assets as investors
 
  A) delayed purchasing these assets until interest rates rose.
  B) chose to sell off these assets due to the low returns on investment.
  C) borrowed at these low interest rates to buy these assets.
  D) switched from investing in these assets to assets with higher risks.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

josephsuarez

  • Sr. Member
  • ****
  • Posts: 323
Answer to Question 1

They are different. Both increase the reserves at the bank by 1 million, but the bank does not have to hold required reserves against the discount loan because it is not a deposit. The entire 1 million of the discount loan is excess reserves, which the bank can loan out.

Answer to Question 2

C




cool

  • Member
  • Posts: 570
Reply 2 on: Jun 29, 2018
:D TYSM


LVPMS

  • Member
  • Posts: 323
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

On average, the stomach produces 2 L of hydrochloric acid per day.

Did you know?

Dogs have been used in studies to detect various cancers in human subjects. They have been trained to sniff breath samples from humans that were collected by having them breathe into special tubes. These people included 55 lung cancer patients, 31 breast cancer patients, and 83 cancer-free patients. The dogs detected 54 of the 55 lung cancer patients as having cancer, detected 28 of the 31 breast cancer patients, and gave only three false-positive results (detecting cancer in people who didn't have it).

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

For a complete list of videos, visit our video library