The Interest Rate That Banks Use as a Reference Point

question 26

Multiple Choice

The interest rate that banks use as a reference point for interest rates on a wide range of loans to businesses and individuals is the

• A)discount rate.
• B)term auction rate.
• C)prime interest rate.
• D)real interest rate.

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Definitions:

Paul Samuelson

An American economist known for his contributions to many areas of economic theory; the first American to win the Nobel Memorial Prize in Economic Sciences.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to negative externalities or a misallocation of resources.

Government Involvement

The extent to which the government participates in the economy, through regulation, ownership, subsidy, or direct control of goods and services.

Legislative Issues

Concerns or matters that require lawmaking bodies to enact, amend, or repeal laws.