Which of the Following Statements About the Penn Central Railroad

question 3

Multiple Choice

Which of the following statements about the Penn Central Railroad crisis is NOT true?

• A)The crisis resulted in a large decline in commercial paper lending.
• B)The crisis was ended by the Fed making credit available to commercial banks.
• C)During the crisis, banks made loans to companies that would normally have used the commercial paper market.
• D)The Fed's charter greatly restricted the number of banks to which it could make loans.

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Definitions:

Opportunity Costs

The cost of the next best alternative foregone when making a decision.

Wasted Time

Time that is not used effectively or productively.

Price Floor

A government-imposed minimum price for goods or services, aimed at preventing market prices from falling below a certain level to protect producers.

Market For Soda

The commercial space in which various types and brands of soda (sugary, carbonated beverages) are bought, sold, and competed over.