The discount rate is generally set __________ the fed funds rate.
A. 1/4 to 1/2 percentage point lower than
B. equal to
C. 1 to 2 percentage points higher than
D. 3/4 to 1 percentage point higher than
Answer: D
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Which of the following is not necessarily true in the long for a competitive industry?
a. Firms earn zero profits. b. Firms set MC = MR. c. A firm will not produce if the market price is less than their break-even price. d. The long-run supply curve is more elastic than the short-run supply curve.
When underproduction occurs,
A) producers gain more surplus at the expense of consumers. B) marginal cost is greater than marginal benefit. C) consumer surplus increases to a harmful amount. D) there is a deadweight loss that is borne by the entire society. E) the deadweight loss harms only consumers.
What is meant by the term "incentives," and why are they important?
What will be an ideal response?
If a monopolist is forced to set price equal to average total cost, economic profit
a. will be negative, and the monopolist may go out of business b. will be zero c. will be positive d. will be negative, and the firm will stay in business if there are significant fixed costs e. may be positive, negative, or zero