1. The bank-lending channel of monetary policy transmission mechanism is increasingly more important:
A with an increase in the number of loan brokers and asset-backed securities.
B as improvements in technology solve the problem of adverse selection.
C as improvements in technology solve the problem of moral hazard.
D as banks become a significant source of funds for firms and individuals.
2. An open market sale of securities by the central bank to banks usually will:
induce the banks to make more loans since their revenue will decrease if they do nothing.
increase the banks' willingness and ability to make loans.
increase the amount of deposits in the banking system.
diminish the inclination of banks to make loans.