Question

The supply curve of reserves in an economy is horizontal when :

A) the federal funds rate is greater than the seasonal credit discount rate.

B) the federal funds rate is less than the secondary credit discount rate.

C) the federal funds rate equals the primary credit discount rate.

D) the federal funds rate is less than the primary credit discount rate.

Answer 1

Option "C" is the correct answer to the following statement.

Step-by-step explanation:

In a system, the supply curve of assets is longitudinal when the inflation rate is equivalent to the main credit rate of return.

The fund's rate is the exchange rate companies charge each other on loans that are used to satisfy capital requirements. Often, the inflation rate is puzzled with the rate of return, which is the rate of interest charged directly by the Federal reserve on credit. But they're not quite the same.

Therefore, option "C" is the correct answer.