The interest rate at which banks borrow excess reserves from each other is known as the
a. prime rate.
b. federal funds rate.
c. discount rate.
d. T-bill rate.
b. federal funds rate.
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"If production of a good creates an external cost, then, when production is such that the marginal private costs are equal to the marginal private benefits, the market outcome will be inefficient
" Explain whether this assertion is correct or incorrect.
The income effect of a price change refers to the impact of a change in
A) income on the price of a good. B) the quantity demanded when income changes. C) the price of a good on a consumer's purchasing power. D) demand when income changes.
Which of the following is the best example of tacit collusion?
A) The formation of a cartel. B) Price leadership. C) Predatory pricing. D) Noncooperative pricing behavior.
Once the federal funds rate is reduced to zero, conventional restrictive monetary policy is no longer an option
a. True b. False Indicate whether the statement is true or false