The Supply Curve of Reserves Has Two Kinks in It

question 139

Multiple Choice

The supply curve of reserves has two kinks in it: one at the _________________ and the other at the ____________________ rate.

• A) interest rate that the Fed pays on reserves; discount
• B) federal funds rate; discount
• C) prime rate; discount
• D) discount rate; federal funds rate

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Definitions:

Indeterminate

An outcome or situation that cannot be definitively determined or predicted due to the presence of too many unknown variables.

Straight Line

In geometry, the shortest distance between two points, characterized by its uniform direction and infinite length in both directions.

Vertical

A term used in economics and business to describe activities or entities that operate at different stages of the production process, from raw materials to final product.

Horizontal

Relating to or involving entities at the same level of a hierarchy or process, often used to describe market competition between companies with similar products.