To Offset the Effect of Households and Firms Deciding to Hold

question 38

Multiple Choice

To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency,the Federal Reserve could

• A)raise the required reserve ratio.
• B)buy Treasury securities.
• C)raise the discount rate.
• D)lower bank taxes.

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Definitions:

Monopoly Power

The ability of a single seller to control market prices and exclude competitors within a particular industry.

Antitrust Policy

Government regulations designed to promote competition and prevent the formation of monopolies or anti-competitive practices.

Price-Fixing

An illegal agreement among competitors to set prices, establish production quotas, or engage in other practices that eliminate or reduce competition within an industry.

Anticompetitive Mergers

Mergers between companies that could reduce competition in an industry, potentially leading to higher prices and reduced innovation.