The interest rate that the Fed charges banks that borrow reserves from it is the
a. federal funds rate.
b. discount rate.
c. reserve requirement.
d. prime rate.
b
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Okun's law states that for every 1-percentage-point increase in the cyclical unemployment rate, real GDP growth
A) must increase by 1 percentage point for the economy to keep from experiencing a recession. B) decreases by about 2 percentage points. C) declines for 1 year. D) increases by 1 percentage point.
What two measures of macroeconomic activity are often referred to as the "twin deficits"?
A) the budget deficit and the trade balance B) net capital flows and net exports C) the foreign exchange deficit and net foreign investment D) the saving-investment deficit and the export deficit
Monopolistic competition is associated with
A) product differentiation. B) price-taking behavior. C) explicit consideration at the firm level of the strategic impact of other firms' pricing decisions. D) high profit margins in the long run. E) increasing returns to scale.
An increase in which of the following leads to a decline in the monetary base?
A) float B) discount loans C) foreign deposits at the Fed D) SDRs