2

When a bank borrows in the federal funds market, this means:

		it is borrowing from the Federal Reserve
		it is lending to the Federal Reserve
		it is borrowing from another bank
		it is borrowing from the US Treasury

3

What does an increase in the tax rate on corporate profits do to a firms coverage ratio?

		increases it
		decreases it
		nothing

4

Two firms, A and B, have positive profit margins. Bs fixed costs as a percentage of total costs exceeds As percentage. Assume both firms experience an equal percentage increase in revenue. Which firm will enjoy a greater percentage increase in profit as a result?

		A
		B
		They will be equal