Virtually All Economists Agree That the Key to the Fed's

question 37

Multiple Choice

Virtually all economists agree that the key to the Fed's power lies in its ability to

• A) control the reserves of the banking system.
• B) change the discount rate whenever it wants to.
• C) issue Federal Reserve notes.
• D) persuade Congress to change fiscal policy.
• E) raise or lower taxes.

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Definitions:

Utility Function

A utility function is an economic model representing satisfaction or preference a consumer derives from consuming goods and services.

Initial Endowment

The original allocation of resources, such as wealth or goods, that an individual or entity starts with.

Numeraire

A standard unit of measurement in economics used to express prices or monetary values, making it easier to compare different goods or services.

Pareto Optimal Allocations

Situations where no reallocation can make someone better off without making someone else worse off in an economy.