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The Prime Rate Has Been Tied to Market Interest Rates

question 74

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The prime rate has been tied to market interest rates to better relate the interest rate to banks' cost of funds.


Definitions:

Troughs

The low points in the economic cycle, characterized by reduced economic activity and lower levels of production and employment.

Unanticipated Inflation

A rate of inflation that is either higher or lower than expected.

Creditors and Debtors

Creditors are entities or individuals to whom money is owed, while debtors are those who owe money to another party.

Unemployed

The state of being without a paid job despite actively seeking work.

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