The Repo Market

question 143

Multiple Choice

The repo market:

• A)is where the Federal Reserve makes loans to banks.
• B)refers to transactions between lenders and borrowers with bad credit.
• C)is the market for houses in foreclosure.
• D)is the overnight credit market.

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Definitions:

Increasing Opportunity Costs

The principle that as you increase production of one good, the opportunity cost of producing an additional unit of this good increases.

Constant Opportunity Costs

A condition in which the opportunity cost of producing one more unit of a good remains constant irrespective of the quantity.

Decreasing Opportunity Costs

A situation where the cost of forgoing the next best alternative decreases as more units of a product or service are produced.

Capital Goods

These are physical assets used in the production process to manufacture goods and services, including buildings, machinery, and equipment.