When a Member Bank Borrows Reserves from the Fed

question 1

Multiple Choice

When a member bank borrows reserves from the Fed,

• A) it pays an interest rate called the discount rate.
• B) it pays no interest rate but is required to repay the loan within the stipulated period.
• C) it pays an interest rate equivalent to the coupon rate on long-term government bonds.
• D) it pays an interest rate equal to the federal funds in the reserves market.

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Definitions:

Confidence Interval

A variety of values, based on statistics from a sample, which is conjectured to envelop an obscure population parameter.

P-value

A statistical concept indicating the probability of observing data as extreme as those seen, if the null hypothesis were true, used in hypothesis testing.

Maximum Oxygen Uptake

The highest amount of oxygen an individual can utilize during intense or maximal exercise, indicating aerobic endurance capacity.

Normal Distribution

A bell-shaped curve, which is symmetric about the mean, depicting the distribution of many types of data.