The Interest Rate Is the Price Borrowers Pay to Borrow

question 116

Multiple Choice

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the quantity of money supplied to

• A)increase.
• B)decrease.
• C)not change.
• D)Uncertain-economic theory has no answer to this question.

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects cash from credit sales by comparing net credit sales with the average balance of accounts receivable.

Fiscal Years

A one-year period that companies and governments use for financial reporting and budgeting, differing from the calendar year.

Maturity Value

The amount payable to an investor at the maturity date of a financial instrument, typically the principal plus any final interest payments.

60-Day Note

A type of short-term debt where the repayment is due 60 days after issuance.