Which of the following is true of the federal funds rate?
a. It is the interest rate that one bank charges another for overnight lending.
b. It is the interest rate that the Federal Reserve Bank charges commercial banks for borrowing money.
c. It is the interest rate you earn in your saving account.
d. It is the interest rate the bank charges business firms for borrowing money.
e. It is the interest rate that a domestic bank charges a foreign bank for borrowing money.
a
You might also like to view...
Economists generally favor the use of tradable emission allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?
A) Some environmentalists believe that Pigovian taxes are a more efficient way to reduce pollution. B) Some environmentalists oppose allowances on legal grounds; they believe the use of allowances is unconstitutional. C) Some environmentalists believe that the price of allowances is often too high for consumers to afford. D) Some environmentalists believe the allowances give firms a license to pollute.
Why is limited liability so important when firms try to raise large amounts of financial capital? How is this advantage of a corporation tied to a disadvantage of a corporation?
What will be an ideal response?
Jake can wash 6 cars or mow 3 lawns during the same time. His marginal cost of washing a car is:
a. mowing one-third lawn. b. mowing half a lawn. c. mowing one lawn. d. mowing 2 lawns.
Which of the following factors can contribute to a further reduction in the money supply in addition to a massive withdrawal of cash from banks?
A. Bank purchases of Treasury bonds from the Fed B. Bank sales of government bonds to meet liquidity demands C. Banks expand the approval and granting of loans D. A decrease in the required reserve ratio