Capital Bank Needs a One-Day Reserve Loan of $3

question 26

Multiple Choice

Capital Bank needs a one-day reserve loan of $3.6 million from Countryside Bank. Which one of the following interest rates will be charged on this loan?

• A)money market
• B)Federal funds
• C)discount
• D)prime
• E)Treasury bill

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Definitions:

Price-Discriminate

The practice of charging different prices to different consumers for the same good or service, based on factors like location, buying habits, or willingness to pay.

Higher Prices

Typically the result of increased demand or reduced supply, leading to a rise in the cost of goods and services.

Deadweight Loss

An economic inefficiency that occurs when the equilibrium for a good or service is not achieved or is not allocatively efficient.

Monopoly

A market structure where a single firm controls the entire market for a good or service, with no close substitutes available.