Firms Organize Production by Using

question 31

Multiple Choice

Firms organize production by using

• A)command systems only.
• B)incentive systems only.
• C)command and incentive systems.
• D)market systems only.
• E)principal-agent systems only.

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Definitions:

Federal Reserve

The central bank of the United States, responsible for setting monetary policy, supervising and regulating banks, and ensuring the stability of the financial system.

Required Reserve Ratio

The fraction of deposits that a bank is required to hold in reserve and not lend out, as mandated by a central banking authority.

Excess Reserves

The reserves that banks hold in excess of the required minimum, often held in the central bank, which can lend them out to generate interest.

New Loans

Any sums of borrowed money that have recently been provided by a lender to a borrower.