Financial intermediaries pool the resources of many small savers so that they can:
A. lower their transaction costs of obtaining funds.
B. obtain the funds necessary to make loans to borrowers seeking large amounts.
C. avoid paying any interest to obtain funds to lend.
D. charge fees to these small savers and earn substantial income.
Answer: B
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When a perfectly competitive firm experiences zero economic profits
A) the high barriers to entry prevent further competition. B) existing firms exit the industry. C) additional firms enter the industry. D) firms have no incentive to exit or enter the industry.
The rate of interest charged by Federal Reserve banks for lending reserves to member banks is the
A. Commercial paper rate. B. Federal funds rate. C. Prime rate. D. Discount rate.
Which of the following expenditures is classified as a mandatory expenditure of the U.S. federal government?
A) federal employee salaries B) national defense C) Medicaid D) foreign aid
Product differentiation is what allows monopolistically competitive firms to have some market power.
Indicate whether the statement is true or false.