Author Question: If commercial banks are increasing their borrowing from the Fed while the Fed is selling government ... (Read 31 times)

dalyningkenk · **on:** Jun 30, 2018

If commercial banks are increasing their borrowing from the Fed while the Fed is selling government securities, the borrowing of the commercial banks from the Fed will tend to:
a. reinforce the contractionary open market operations policy.
b. reinforce the expansionary open market operations policy.
c. counteract the contractionary open market operations policy.
d. counteract the expansionary open market operations policy.

Question 2

If the government provides a subsidy in one industry and raises the tax revenue by taxing another industry, would, other things equal, cause welfare costs in both industries.
a. True
b. False
Indicate whether the statement is true or false