In practice, the Federal Reserve keeps the discount rate close to the ________ rate in order to avoid large swings in borrowed reserves by banks.
A. inflation
B. six-month Treasury bill
C. federal funds
D. prime
Answer: C
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A possible explanation for a natural phenomenon is called
A. the scientific method. B. a theory. C. a value judgment. D. normative economics.
A change in the price of hamburgers will change the supply of hot dogs.
Answer the following statement true (T) or false (F)
Even though prices may change frequently, they can be expected to gravitate toward equilibrium.
Answer the following statement true (T) or false (F)
Economists usually assume that people act in a rational, self-interested way. In explaining how consumers make choices this means that economists believe
A) consumers will spend their incomes and time on activities that benefit themselves as much as possible, without regard to the welfare of others. B) consumers spend their incomes to order to accumulate the most goods and services. C) consumers make choices that will leave them as satisfied as possible given their incomes, tastes, and the prices of goods and services available to them. D) consumers will always buy goods and services at the lowest possible prices.