What is the difference between primary and secondary credit offered by the Fed and who would use secondary credit?
What will be an ideal response?
Primary credit is what is usually considered as discount loans. These are short-term (usually overnight) loans where the interest rate is set over the IOER rate. Secondary credit is available for institutions that are not financially sound enough to qualify for primary credit. The interest rate is set above primary credit and the loans are usually sought by institutions experiencing financial difficulty, but with time can resolve their problems without failing and can convince the Fed that they can do so.
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Suppose Spam is an inferior good. If the U.S. economy hit bad times, and demanders' incomes were to fall, which of the following would tend to occur?
A) Spam sales would increase. B) Spam demand would decrease. C) The price of Spam would increase. D) Both A and C above. E) Both B and C above.
Icy Treats is a large Italian ice dessert chain with franchises located throughout the United States. Icy Treats' advertising ________ promote the benefits of eating Icy Treats' icees and ________ highlight an individual Icy Treats location in Asheville, North Carolina.
A) will; will not B) will not; will not C) will not; will D) will; will
Given aggregate demand, a decrease in aggregate supply creates:
a. a higher price level and a higher GDP level. b. a lower price level and a higher GDP level. c. cost-push inflation. d. demand-pull inflation.
In terms of investing, what is suggested by the random walk theory?
a. Future stock prices cannot be predicted. b. Stocks are a safer investment than bonds. c. Long-term investments are risky but necessary. d. Wealthy people are prepared to handle stock risks.