The Fact That There Is a Market for Federal Funds

question 123

Multiple Choice

The fact that there is a market for federal funds enables banks to:

• A)Make fewer loans than they would otherwise
• B)Borrow more from the Fed
• C)Hold a lower level of excess reserves than they would otherwise hold
• D)Hold less in required reserves

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Definitions:

Marginal Revenue Product

The extra income produced through the use of an additional unit of a resource, like labor or capital.

Wage Rate

The amount of compensation or payment in terms of money received by an employee from an employer in exchange for work or services.

Repair People

Professionals specialized in fixing or mending machinery, equipment, or structures to ensure proper function and reliability.

Demand for Labor

The total demand for workers in an economy, which is influenced by wages, productivity, and the overall level of economic activity.