The federal funds rate is the interest rate that
A. is paid on government bonds.
B. is paid on 3-month Treasury bills.
C. the Fed charges banks to borrow funds.
D. banks are charged when they borrow reserves from other banks.
Answer: D
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If the marginal social cost exceeds the marginal social benefit for the last pair of shoes produced, then the economy is producing more than the efficient amount
Indicate whether the statement is true or false
An unexpected fall in the Producer Price Index should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
If the money supply increases at the same time that taxes increase, then:
a. interest rates will definitely increase. b. interest rates will definitely decrease. c. income will definitely increase. d. income will definitely decrease.
Several writers have helped to popularize the notion that stock prices follow no discernible pattern. What is meant by a random walk, and how can you explain why people continue to invest in stocks if the random walk theory is correct?