The Lowest Rate of Interest Charged by a Bank for a Short-Term

question 9

Multiple Choice

The lowest rate of interest charged by a bank for a short-term loan is known as

• A) the discount rate.
• B) dividends.
• C) add-on interest.
• D) the compound interest rate.
• E) the prime interest rate.

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Definitions:

Economic Efficiency

A state in which resources are allocated in a way that maximizes the production of goods and services at the lowest cost, while achieving the highest possible welfare or utility.

Negative Externalities

Costs experienced by third parties due to the actions of others that are not reflected in market prices.

Clayton Act

A U.S. antitrust law, adopted in 1914, aimed at protecting competition by prohibiting certain actions that lead to anticompetitiveness.

Celler-Kefauver Act

A U.S. law enacted in 1950 to amend the Clayton Act, aiming to prevent anti-competitive mergers and acquisitions by prohibiting the acquisition of assets if the effect reduces competition.