If the Demand for Reserves Intersects the Vertical Portion of the Supply

question 32

True/False

If the demand for reserves intersects the vertical portion of the supply for reserves, the equilibrium federal funds rate is less than or equal to the discount rate.

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Definitions:

Net Income Before Taxes

The total earnings of a company before taxes have been deducted.

Gross Profit

The difference between revenues and the cost of goods sold before deducting overheads, taxes, interest, and depreciation.

Rate of Return on Total Assets

A financial ratio that shows how effectively a company uses its assets to generate profit, calculated as net income divided by total assets.

Total Assets

The sum of all resources owned by a company, measurable in monetary terms, and listed on the balance sheet.