The Federal Reserve System Was Established in 1913 in Response

question 224

Multiple Choice

The Federal Reserve System was established in 1913 in response to the

• A) First World War.
• B) bank panic of 1907.
• C) depression of 1883.
• D) prosperity of the 1920s.

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Definitions:

Externality Problems

Situations in economics where the actions of individuals or businesses have effects, either positive or negative, on unrelated third parties that are not reflected in the cost or benefit of the actions.

Social Welfare

A holistic measure of the well-being and quality of life of individuals and groups within a society.

Rights To Pollute

Permits or allowances that grant entities the authorization to emit certain amounts of pollutants, often used in regulatory systems to control environmental damage.

Coase Theorem

The Coase Theorem postulates that if property rights are well-defined and transaction costs are low, parties will negotiate privately to correct externalities and allocate resources efficiently.