If the currency drain ratio increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?
What will be an ideal response?
If the currency drain ratio increases, the size of the money multiplier decreases, which decreases the quantity of money. To maintain the quantity of money at its initial amount by changing the monetary base, the Fed must increase the monetary base.
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Price-taking producers have horizontal marginal revenue curves.
Answer the following statement true (T) or false (F)
Which of the following believe that discretionary monetary policy and discretionary fiscal policy are effective countercyclical policy actions? activists
a. rule advocates b. activists c. new classical economists d. rational expectations theorists
Empirical evidence indicates that higher real interest rates lead to ________ in savings.
A. no change in B. modest increases C. modest decreases D. substantial increases
Output Total Cost015125233340448558670
Refer to Table 5.5. The firm experiences diminishing returns beginning with the ________ unit.
A. first B. second C. third D. fourth