Suppose that the Fed buys $1 million of bonds from the First National Bank. If this bank and all other banks use the resulting increase in reserves to purchase securities only and not to make loans, what will happen to checkable deposits? Assuming the rr is 10%
Answer : checkable deposits increase by $10 million (1/.10 * 1 million)
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Which of the following policy tools did the Fed create in 2008 to address the financial crisis?
i) quantitative easing ii) credit easing iii) open market operations A) ii only B) i and ii C) i and iii D) i only E) ii and iii
If the capital—labor ratio is above the Golden Rule capital—labor ratio, then in the steady state,
A) capital per worker is above its maximum. B) output per worker is less than it would be at the Golden Rule capital—labor ratio. C) investment per worker exceeds output per worker. D) consumption per worker is not at its maximum.
Hank's Honey is a bee farm out in the country. Kid Kare Nursery School is next door. Fleurette's fruit orchard is located on the other side of the school. Hank's bees, searching for nectar, buzz by the nursery school to feed in Fleurette's orchard and in doing so, pollinate the fruit. The school children, however, fear the bees. Who benefits in this story?
a. Hank and Fleurette b. Kid Kare c. Hank only d. Fleurette only e. no one benefits, but Kid Kare loses
Aaron gave up a job in a tire shop that paid $20,000 a year to start his own T-shirt business. The T-shirt company has the following revenues and costs: TR = $60,000 . cost of hiring employees = $40,000 . cost of materials = $8,000 . cost of rent and insurance = $6,000 . According to these data, Aaron's business made a(n)
a. economic profit of $6,000 b. normal profit of $6,000 c. economic loss of $6,000 d. economic loss of $14,000 e. normal profit of $14,000