The Fed Can Directly Protect a Bank During a Bank

question 62

Multiple Choice

The Fed can directly protect a bank during a bank run by

• A)increasing reserve requirements.
• B)selling government bonds to the bank.
• C)lending reserves to the bank.
• D)doing any of the above.

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Definitions:

Dimes

A coin representing ten cents in the United States currency.

Marginal Rate

The marginal rate usually refers to the incremental increase or decrease in the assessment of a variable or cost in response to a change in some activity.

Goods A

Indicating a generic category of tangible products or commodities.

Budget Constraint

The financial limit on the consumption choices of an individual or household based on income and the prices of goods and services.