The Prime Rate

question 13

Multiple Choice

The prime rate

• A) is the annual rate of interest for banks' best customers.
• B) changes infrequently
• C) is usually lower than treasury bill rates.
• D) none of the other answers are correct

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Definitions:

Trade Balance

The difference in value between a country's imports and exports over a certain period.

Real Interest Rates

The interest rate adjusted for inflation, reflecting the real cost of borrowing and the real yield to lenders or investors.

Crowding Out

The phenomenon where increased government spending leads to a reduction in private sector spending or investment, often due to higher interest rates.

Domestic Investment

Domestic investment refers to the total spending on capital within a country that is used for the production of goods and services.