The reserves of a commercial bank consist of:
A. the amount of money market funds it holds.
B. deposits at the Federal Reserve Bank and vault cash.
C. government securities that the bank holds.
D. the bank's net worth.
B. deposits at the Federal Reserve Bank and vault cash.
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When the government uses a cap-and-trade approach in dealing with pollution, it
A) uses taxes in order to internalize the externalities caused by the pollution. B) imposes quantitative limits on the amount of pollution firms are allowed to generate. C) uses subsidies to encourage firms to use new technology that reduces pollution. D) distributes information to consumers and producers on how to reduce pollution.
The spread between the interest rates on bonds with default risk and default-free bonds is called the
A) risk premium. B) junk margin. C) bond margin. D) default premium.