Author Question: Lowering the discount rate will A) increase reserves, encourage banks to make more loans, and ... (Read 37 times)

mspears3 · **on:** Jun 29, 2018

Lowering the discount rate will

A) increase reserves, encourage banks to make more loans, and increase the money supply.
B) decrease reserves, encourage banks to make fewer loans, and increase the money supply.
C) decrease reserves, encourage banks to make fewer loans, and decrease the money supply.
D) increase reserves, encourage banks to make more loans, and decrease the money supply.

Question 2

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.
B) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.
C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase.
D) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined.