The interest rate that banks pay for borrowing overnight from other banks is called:
a. bank rate.
b. target rate.
c. federal funds rate.
d. real interest rate.
e. prime lending rate.
c
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? Assume that Figure 4-4 shows demand for MP3 players. An increase in the price of music downloads changes demand from
A. D1to D2. B. D2to D1. C. D2to D3. D. D1to D3.
When people make rational choices, they
A) do not consider their emotions. B) weigh the costs and benefits of their options and act to satisfy their wants. C) are necessarily making the best decision. D) necessarily make a decision in the social interest. E) behave selfishly.
Assuming price elasticity of demand is reported as an absolute value, a good with unit elastic demand has an elasticity:
A. between zero and one. B. greater than one. C. less than one, but greater than zero. D. equal to one.
Along a linear demand curve, total revenue is maximized when demand is
a. elastic b. inelastic c. unit elastic d. perfectly elastic e. perfectly inelastic