Question
Indicate which of the following statements are true and which are false; if false, explain why. a. If the reserve ratio of a bank falls
Indicate which of the following statements are true and which are false; if false, explain why. a. If the reserve ratio of a bank falls below the level required by the Fed, it may borrow cash from the Fed at the reigning discount rate. b. The purchase of government securities (i.e. bonds and bills) from the public by the Fed will begin a contraction in commercial bank credit. c. If money is to remain generally acceptable as a medium of exchange, and to act as a unit of account and store of value, then it must consist of something that is useful and desirable for its own sake. d. If a bank is loaned up (i.e. has no excess reserves above the legal minimum), this means its loans equal its deposits. e. The demand for money will be higher when incomes are higher, and will be lower when interest rates are lower. f. Inflation always benefits debtors and hurts creditors. g. Nobody gains when pure, perfectly anticipated inflation occurs. But nobody loses either.
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