Normally, whenever the central bank lowers the rate it charges banks for overnight loans market rates of interest:
a. are not affected.
b. fall at the same rate.
c. increase.
d. are unstable.
Ans: b. fall at the same rate.
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Which of the following statements is TRUE?
A) There is a direct relationship between investment and the interest rate. B) There is an inverse relationship between investment and the interest rate. C) Investment is always less than savings. D) There is no relationship between investment and the interest rate.
When the Fed wants to undertake open market operations, it
A) buys or sells securities through the trading desk at the New York Federal Reserve Bank. B) can require all commercial banks to buy from or sell to it. C) can require all member banks to buy from or sell to it. D) buys from or sells to the U.S. Treasury.
Public goods are basically
A) rival in consumption. B) nonrival in consumption. C) depletable in consumption. D) nondepletable in consumption.
The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also buys paper cups from Sudsy. This requirement is an example of
A) product versioning. B) tie-in sales. C) price differentiation. D) complementary pricing.