Why is it necessary to distinguish between the target federal funds rate range and the market federal funds rate?
What will be an ideal response?
The need to distinguish the two comes from the fact that while the FOMC can set a target range that they would like to see for the federal funds rate, the actual rate is determined in the market, meaning it is set by supply and demand. The Fed alters the supply of reserves, usually early in the day, the demand for reserves though is not certain and since it can change the actual market federal funds rate can and does deviate from the target.
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A monopolistically competitive firm is one:
A. of many firms that all sell the exact same product. B. that behaves like a monopolist. C. of many firms that sell products that are close but not perfect substitutes. D. of a small number of firms that sell products that are close but not perfect substitutes.
The production possibilities curve marks the boundary between attainable and unattainable combinations of output
a. True b. False Indicate whether the statement is true or false