The interest rate that banks charge one another for the loan of excess reserves is the:
A. Prime interest rate
B. Federal funds rate
C. Discount rate
D. Interest on reserves
B. Federal funds rate
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Government policies that are used to affect aggregate expenditure, with the objective of eliminating output gaps, are called ________ policies.
A. stabilization B. productivity C. cyclical D. structural
Explain how prices in a competitive market form --- and how they take the place of almost limitless information that a social planner would need if he tried to mimic the market outcome.
What will be an ideal response?
Suppose studies showed that only 15 percent of all teens wear their bike helmets while riding their bikes. If policymakers wish to have more teens wear their bike helmets, they should:
A. not inform teens of the social norm. B. Informing them of the social norm will have no impact on their individual situation. C. inform teens of the social norm. D. The statistic is likely to influence their personal decision, but it is impossible to predict in what way without more information.
If the probability of an outcome is zero, you know the outcome is:
A. certain to occur. B. more likely to occur. C. less likely to occur. D. certain not to occur.