Figure 14-1 Above Represents the Six Steps in Setting Price

question 293

Multiple Choice

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would offer allowances?

• A)"F"
• B)"E"
• C)"D"
• D)"C"
• E)"B"

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Definitions:

Open Market Sale

The selling of government bonds to the public or banks by the central bank to control the money supply.

Discount Rate

The interest rate charged by central banks on loans offered to commercial banks or the rate used to discount future cash flows to present value.

Required Reserve Ratios

These are central bank regulations set on the minimum amount of reserves that commercial banks must hold against deposits.

Excess Reserves

The reserves held by banks over and above the legal reserve requirement set by the central bank or regulatory authority.