Under the Channel System, a Shift in the Demand for Reserves

question 2

Multiple Choice

Under the channel system, a shift in the demand for reserves can change the equilibrium overnight rate if that rate is

• A) equal to the discount rate.
• B) equal to the interest rate on reserves.
• C) between the discount rate and the interest rate on reserves.
• D) all of the above.

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Definitions:

Total Utility

The overall satisfaction or pleasure a person derives from consuming a certain amount or quantity of goods or services.

Limited Income

Income that is not sufficient to meet the minimum standard of living or personal financial needs.

Total Product Curve

Illustrates the total output of a good or service produced by a firm as a function of the input used.

Process Innovation

An improvement in the methods or technologies used in the production of goods and services, aimed at increasing efficiency or quality.