The Supply Curve of Reserves Has Two Kinks in It

question 139

Multiple Choice

The supply curve of reserves has two kinks in it: one at the _________________ and the other at the ____________________ rate.

• A) interest rate that the Fed pays on reserves; discount
• B) federal funds rate; discount
• C) prime rate; discount
• D) discount rate; federal funds rate

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Definitions:

Supply Price

The minimum price at which a producer is willing to sell a good or service, influenced by production costs and market conditions.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at each price level.

Quota

A government-imposed trade restriction limiting the number or value of goods that can be imported or exported during a specific time.

Consumers Pay

The amount of money paid by consumers to purchase goods and services, reflecting their expenditure on consumer products.