A Bank Is Less Likely to Borrow from the Fed

question 10

Multiple Choice

A bank is less likely to borrow from the Fed when the __________ falls relative to the __________.

• A) discount rate; required reserve ratio
• B) excess reserve; required reserves
• C) discount rate; federal funds rate
• D) federal funds rate; discount rate

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Definitions:

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that give an individual equal satisfaction and utility.

Budget Constraint

The limitations on the spending decisions of consumers based on their income and the prices of goods and services.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers.

Perfectly Inelastic

Perfectly inelastic describes a market scenario where the quantity demanded or supplied does not change regardless of price fluctuations.