The Primary Purpose of the Discount Window Is to

question 107

Multiple Choice

The primary purpose of the discount window is to

• A)influence the nation's money supply.
• B)fulfill the bank's lender of last resort role.
• C)control banks' excess reserves.
• D)influence the amount of loans that banks provide to the public.

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Definitions:

Quantity Effect

The impact on total revenue when the quantity sold changes while the price remains the same.

Marginal Cost

The increased expenditure resulting from making an additional unit of a product or service.

Oligopoly

A market structure characterized by a small number of firms that have significant market power, leading to limited competition.

Price Fixing

An illegal practice where businesses collude to set prices at a certain level, rather than allowing market forces to determine them.