When the Fed Increases the Discount Rate, It

question 79

Multiple Choice

When the Fed increases the discount rate, it:

• A) increases the reserve to deposit ratio (rr).
• B) decreases the reserve to deposit ratio (rr).
• C) is likely to increase the monetary base (B)
• D) is likely to decrease the monetary base (B).

Identify the factors that influence economic decisions and behaviors, including marginal analysis and opportunity costs.

Understand the basic economic problem of scarcity and how it requires choices that entail opportunity costs.

Describe the functions of entrepreneurs in the economy and differentiate between various economic resources.

Distinguish between macroeconomics and microeconomics and their areas of study.

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Definitions:

Setup Costs

The expenses incurred to prepare equipment or processes for manufacturing or production runs.

Payoffs

The outcomes or rewards received as a result of a decision or action, often evaluated in decision-making processes to anticipate different scenarios' benefits or drawbacks.

Clearance Priced

Reduced pricing strategies applied to products or inventory intended to be sold quickly, often to make room for new stock or to eliminate excess.

Demand Patterns

The trends or tendencies in consumer demand over time, which can vary due to seasonality, market changes, or other factors.