Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage

question 119

Multiple Choice

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following
questions:
-According to Application 4, by buying commercial paper or extending short term loans to corporations, the Fed is applying which of its primary functions to private corporations?

• A) lender of last resort
• B) provide a system of check collection and clearing
• C) conduct monetary policy
• D) supply currency to the economy

---

Definitions:

Marginal Output

The additional amount of output that is produced as a result of a one unit increase in the input of a production process.

Resource

Assets, materials, or inputs used to produce goods and services, including natural resources, human resources, and capital.

AVC Curve

Represents the Average Variable Cost Curve, which shows the relationship between a firm's output and the variable costs per unit of output, typically declining and then rising.

AFC Curve

The Average Fixed Cost curve, which represents the fixed costs of production divided by the quantity of output produced, typically demonstrating a downward slope as output increases.