When the Fed Was Created in 1913

question 14

Multiple Choice

When the Fed was created in 1913,

• A)it had no role in the management of the nation's economy.
• B)it was restricted to providing emergency loans to financial institutions.
• C)it adhered to a strictly supply-side policy focus.
• D)its primary economic management tool was to reduce inflation by restricting the money supply.
• E)it was far more likely to increase the money supply by lowering interest rates than to restrict it by raising them.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service, considering both private and external benefits.

Marginal Social Cost

The additional cost to society as a whole for producing one more unit of a good or service.

Public Good

A product or service that is available for all people to consume, regardless of whether any individual pays for it or not, typically provided by the government.