The interest rate that the fome currently chooses to control is:
A. the discount rate.
B. the federal funds rate.
C. the prime rate.
D. the 30-year Treasury bond rate.
Answer: B
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If Ben becomes less likely to buy smoke detectors after he has fire insurance, he is illustrating
A) moral hazard. B) adverse selection. C) the lemon problem. D) the free rider problem.
John has an economics test tomorrow. He must study and has planned the rest of his day so that he can fit some study time in. He has decided to go to the gym and then study for several hours. Which of the following statements is TRUE?
A) John did not use the economic way of thinking because his decision on how to allocate his time did not involve money. B) John's decision on how to allocate his time is inconsistent with the rationality assumption since he has decided to go to the gym. C) John's decision on how to allocate his time is consistent with the rationality assumption since the decision is intended to make him better off. D) John's decision does not involve his pursuit of self-interest.
Say's law says that
A) consumption is greater than supply. B) desired expenditures always equal actual expenditures. C) people produce the goods they consume. D) people consume the goods they produce.
Tenth National Bank holds $300 million in total deposits and $35 million in reserves. With a required reserve ratio of 9.5 percent, how much in excess reserves is Tenth National holding?
a.31.7 million b. 28.5 million c. 3.3 million d. 6.5 million