Raising Interest Rates Following the Use of Unconventional Policy Tools

question 92

Multiple Choice

Raising interest rates following the use of unconventional policy tools depend on

• A) the size and composition of the central bank's balance sheet.
• B) the toolbox available to the central bank.
• C) both the size and composition of the central bank's balance sheet and the toolbox available to the central bank.
• D) neither the size and composition of the central bank's balance sheet and the toolbox available to the central bank.

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Definitions:

Barrier To Entry

Barriers to entry are obstacles or impediments that make it difficult for new entrants to enter a particular market, such as high start-up costs, strict regulations, or strong brand loyalty among consumers.

Economies Of Scale

Economies of scale are cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with the increase in scale of operation.

Natural Monopoly

An industry that realizes such large economies of scale that single-firm production of that good or service is most efficient.

Profit-Maximizing Price

The price at which a firm can sell its product to earn the maximum possible profit on those sales.