Rolliand Bank Is Going Through a Financial Crisis

question 23

Multiple Choice

Rolliand Bank is going through a financial crisis. Therefore, it takes a loan from the Federal Reserve. The bank has to repay the loan within a year, and it also has to pay a monthly interest of 6% to the Fed. In this case, the 6% interest rate that the Fed charges from Rolliand Bank is the _____.

• A) prime rate
• B) nominal rate
• C) discount rate
• D) exchange rate

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Definitions:

Free Trade

An economic policy that allows imports and exports among member countries with little to no tariff barriers, quotas, or subsidies.

Total Output

Total output refers to the total quantity of goods and services produced within an economy at a given time period, reflecting the aggregate production level.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.

International Trade

The movement of goods and services across national boundaries or territories for trade purposes.