How does the reserve requirement impact the banking system as a monetary policy tool, and is it used frequently?
What will be an ideal response?
A change in the reserve requirement changes excess reserves and the money multiplier, both of which affect the lending capacity of the banking system. These changes combined can lead to extreme changes in the money supply and disruptions in banking activity. For these reasons, the Fed does not change the reserve requirement frequently. The reserve ratio affects every bank, whereas the discount rate affects only banks in reserve holdings trouble. Open market operations have an even smaller effect on the economy.
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A typical American family sends about _____ percent of its budget on services.
A. 20 B. 32 C. 66 D. 70
A property tax payment made by the owner of an apartment building is a
A) cost irrelevant to rent-setting decisions because it is not affected by supply and demand. B) marginal cost of continuing to own the building. C) marginal cost of supplying rental space. D) marginal overhead cost and will therefore affect rental rates. E) sunk cost and therefore cannot affect rents even in the long run.
In the United States, why are cartels among firms usually kept secret?
What will be an ideal response?
The per person production function representing both physical capital per person (K/N) and human capital per person (H/N) is
A) Y/N = (K/N)b(H/N)c. B) Y/N = (K/N)b + (H/N)c. C) Y/N = (K/N)b - (H/N)c. D) Y/N = (K/N)b/(H/N)c.