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VARIABLE INPUT: An input whose quantity can be changed in the time period under consideration. This should be immediately compared and contrasted with fixed input. The most common example of a variable input is labor. A variable input provides the extra inputs that a firm needs to expand short-run production. In contrast, a fixed input, like capital, provides the capacity constraint in production. As larger quantities of a variable input, like labor, are added to a fixed input like capital, the variable input becomes less productive. This is, by the way, the law of diminishing marginal returns.
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Lesson 20: Federal Reserve System | Unit 4: Monetary Policy
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Page: 15 of 20
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The discount rate is the interest rate the Fed charges for reserve loans to commercial banks.- The Federal Funds rate is for loans between commercial banks.
- The discount rate is for loans from the Fed to commercial banks.
- Banks borrow from the Fed when the need reserves to stay in business. The price they pay is the discount rate.
Why don't troubled banks use the Federal Funds Market? - Other banks are probably reluctant to extend a loan.
- The entire banking system might be short of reserves.
- The discount rate is typically lower than the federal funds rate.
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TRADITIONAL BANKS The first financial intermediaries to function as depository institutions, maintain deposits, make loans, and directly control the checkable deposits portion of the economy's money supply. Traditional banks were THE original banks, the financial depository institutions first to offer checkable deposits. Traditional banks invariably have the word "bank" in their names and are charted by either the Comptroller of the Currency or one of the fifty state corporation commissions. Three other types of banks, as a group commonly termed thrift institutions, are credit unions, savings and loan associations, and mutual savings banks.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors hoping to buy either handcrafted decorations to hang on your walls or throw pillows for your bed. Be on the lookout for jovial bank tellers.
Your Complete Scope
This isn't me! What am I?
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A U.S. dime has 118 groves around its edge, one fewer than a U.S. quarter.
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"When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, „I used everything you gave me.¾" -- Erma Bombeck, writer
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JLE
Journal of Law and Economics
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