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Why Is It Necessary to Distinguish Between the Target Federal

question 62

Essay

Why is it necessary to distinguish between the target federal funds rate and the market federal funds rate?


Definitions:

Explicit Cost

The monetary payment made by a firm to an outsider to obtain a resource.

Accounting Profits

The net income a company has after subtracting all costs and expenses from total revenue, as recognized in financial statements.

Opportunity Cost

The value of the next best alternative that is foregone as a result of making a particular decision.

Accounting Profits

The total revenues of a business minus the explicit costs, essentially the net income on the financial statements.

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