Which of the Following Statements About the Deposit Facility in the Eurosystem

question 16

Multiple Choice

Which of the following statements about the deposit facility in the Eurosystem are correct?

• A)Banks are paid an interest rate that is typically 100 basis points below the target financing rate.
• B)The prespecified interest rate on the deposit facility provides a floor for the overnight market interest rate.
• C)The interest rate on reserves set by the ECB is not always positive.
• D)All of the above.
• E)Only A and B.

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Definitions:

Utility Function

A mathematical representation of how choices lead to different levels of happiness or satisfaction, showcasing preferences over a set of goods or outcomes.

Milk Consumption

The amount of milk drunk or used by individuals or populations over a specific period.

Endowment

The total resources available to an individual or economy, including land, labor, capital, and technology.

Price

The amount of money required to purchase a good or service, often determined by factors like supply, demand, and production cost.