Give an equation that shows the relationship between actual, required, and excess reserves.
What will be an ideal response?
Actual reserves = required plus excess reserves; or alternatively, excess reserves = actual minus required reserves.
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Use a figure to illustrate the ineffectiveness of monetary policy to spur on an economy under a fixed exchange rate
What will be an ideal response?
Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?
a. b and e. b. The marginal cost is equal to $.01. c. The marginal cost is equal to $1.01. d. The marginal cost is rising. e. The marginal cost is falling.
Externalities require government intervention when
A. violence will result between disputing parties. B. there are only a few sellers in the market. C. property rights are not clearly established. D. the government imposes sales taxes. E. all of these answer options are correct.
Most economists agree that the focus of fiscal policy is to
A. plan the economy. B. balance aggregate demand and aggregate supply. C. balance the federal budget. D. balance environmental needs and resources.