The Most Important Function of a Central Bank Is to

question 53

Multiple Choice

The most important function of a central bank is to

• A) set interest rates.
• B) make loans to the Federal Reserve System.
• C) hold time and demand deposits.
• D) control the quantity of money.
• E) lend out money to large corporations.

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Definitions:

Margin

The difference between the selling price of a product and its cost of production or buying price, often expressed as a percentage of the selling price.

Marginal Analysis

The examination of the benefits and costs of an additional unit of consumption or production, used to make decisions based on the extent of added benefits over added costs.

Lemonade

A sweetened beverage made from lemon juice, water, and sugar, often sold as a refreshment during warm weather.

Opportunity Cost

Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen.