The Interest Rate Charged by the Fed for Loans to Commercial

question 16

Multiple Choice

The interest rate charged by the Fed for loans to commercial banks is called the

• A) prime rate.
• B) required reserve ratio.
• C) discount rate.
• D) Q rate.
• E) T-bill rate.

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Definitions:

Real Exchange Rate

The rate at which two currencies can be exchanged after adjusting for their respective inflation rates.

Nominal Exchange Rate

The exchange rate at which the currency of one nation can be swapped for that of another.

Price Level

The current average pricing of all economic goods and services across the spectrum.

Purchasing-Power Parity

A theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.