Question

<pre class=”ql-syntax”>The federal funds rate is the interest: A. rate at <span

class=”hljs-built_in”>which</span> the Fed lends to commercial banks. B. rate at <span class=”hljs-built_in”>which</span> commercial banks lend to each other. C. yield on long-term government bonds. D. rate at <span class=”hljs-built_in”>which</span> commercial banks lend to the public. E. rate at <span class=”hljs-built_in”>which</span> the Fed lends to the U.S. Treasury. Imagine that Sam deposits <span class=”hljs-variable”>$50</span>,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 25%. As a result of Kristy<span class=”hljs-string”>’s deposit, Bank A'</span>s reserves immediately increase by A. <span class=”hljs-variable”>$37</span>,500. B. <span class=”hljs-variable”>$12</span>,500. C. <span class=”hljs-variable”>$2</span>,500. D. <span class=”hljs-variable”>$50</span>,000. </pre>

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