When the Federal Reserve Lends Reserves to Depository Institutions, It

question 448

Multiple Choice

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

• A) loan rate.
• B) discount rate.
• C) federal funds rate.
• D) prime rate.

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Definitions:

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, utilizing both fuel and electricity.

Consumer Surplus

The gap between what consumers are prepared to pay for a good or service and what they actually do pay.

Binding Price Floor

A minimum price set by the government for certain goods and services that is above the equilibrium price, causing a surplus.

Unwanted Surplus

An excess of goods that exceeds consumer demand, leading to unsold stock and potential waste.