The Federal Reserve Has More Impact on Interest Rates

question 45

Multiple Choice

The Federal Reserve has more impact on interest rates:

• A) in the long run than in the short run.
• B) when banks have a lot of excess reserve than when banks have zero excess reserve.
• C) when they are falling than when they are rising.
• D) in the short run than in the long run.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Contribution Margin

The difference between the sales revenue of a product and the variable costs associated with producing it, used to cover fixed costs and contribute to profit.

Variable Costing

An accounting method that only includes variable production costs—costs that change with production volume—in the cost of goods sold.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business within a certain range of activity.