The federal funds rate is the interest rate that
(a) the Federal Reserve charges the federal government on its loans
(b) banks charge one another for short-term loans
(c) banks charge their best customers
(d) equalizes the yield on government bonds and corporate bonds
(e) is equal to the inflation rate
Ans: (b) banks charge one another for short-term loans
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Which of the following situations will arise in the domestic market following the imposition of an import ban?
A) imports decrease, domestic production increases, prices increase B) imports increase, domestic production increases, prices increase C) imports increase, domestic production decreases, prices decrease D) imports decrease, domestic production increases, prices decrease
Questions about employment history on a loan application are used to prevent
A) moral hazard. B) adverse selection. C) market signaling. D) risk aversion.
The percent change in the quantity of one commodity demanded divided by the percent change in the price of another commodity is the
a. price elasticity of demand b. price elasticity of supply c. income elasticity of demand d. income elasticity of supply e. cross-price elasticity of demand
The money-multiplier process is based on the principle of fractional reserve banking.
Answer the following statement true (T) or false (F)