Suppose the current federal funds rate is 0.25% and the Fed chooses to raise its target to 0.5%. Make use of a graph of the federal funds market to show how it will use open market operations to accomplish this
What will be an ideal response?
The Fed will conduct open market sales, reducing the supply of reserves until the new equilibrium federal funds rate rises to 0.5%.
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Firm A charges $8.50 for each unit of Good X. If the average total cost of producing 1,000 units of Good X is $12 and the market for Good X is monopolistically competitive, Firm A ________ by producing 1,000 units of Good X
A) earns a profit of $3,500 B) earns a profit of $1,000 C) incurs a loss of $1,000 D) incurs a loss of $3,500
Historical episodes are not valuable to economists
a. True b. False Indicate whether the statement is true or false
Which of Bernardo’s actions is part of the input market?
a. He advises a law firm. b. He buys groceries. c. He runs three miles a day. d. He visits the doctor.
“Monopoly has developed in both product and resource markets because of the shortcomings and inefficiencies of competitive markets.” Do you agree? Explain
What will be an ideal response?