The discount rate is
A. the interest rate commercial banks charge their new customers.
B. the interest rate the Fed charges commercial banks for borrowing funds.
C. the interest rate commercial banks charge each other for borrowing funds.
D. the interest rate commercial banks charge their most creditworthy customers.
Answer: B
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If a perfectly competitive firm raised the price of its product,
A) its profits would increase. B) the quantity of output it sells decreases to zero. C) rival firms will follow suit and raise their prices also. D) the firm will be forced to advertise more. E) its total revenue would rise but its total cost would rise by more.
The endpoints (horizontal and vertical intercepts) of the budget line:
A) measure its slope. B) measure the rate at which one good can be substituted for another. C) measure the rate at which a consumer is willing to trade one good for another. D) represent the quantity of each good that could be purchased if all of the budget were allocated to that good. E) indicate the highest level of satisfaction the consumer can achieve.