The Federal Reserve's Balance sheet would include an item labeled currency. Is this an asset or a liability of the Fed, and does it include all currency that is printed? Explain.
What will be an ideal response?
The currency is a liability since it is an asset of whoever is holding it. As a result, the currency in this category only includes non-bank currency, or the currency that is in the hands of the public, and does not include vault cash, which is part of the banking system's reserves.
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The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by
A) 0 hours. B) 10 million hours per year. C) 20 million hours per year. D) 30 million hours per year.
If an industry is made up of five identical firms, the four-firm concentration ratio is
A) 5%. B) 20%. C) 80%. D) 100%.
Suppose the economy's production function is Y = A(300N – N2). The marginal product of labor is MPN = A(300 - 2N). Suppose that A = 10. The supply of labor is NS = 0.05w + 0.005G
(a) If G is 26,000, what are the real wage, employment, and output? (b) If G rises to 26,400, what are the real wage, employment, and output? (c) If G falls to 25,600, what are the real wage, employment, and output? (d) In cases (b) and (c), what is the government purchases multiplier; that is, what is the change in output divided by the change in government purchases?
A price floor in a perfectly competitive market
a. creates more harm for sellers than gain for buyers b. is effective only it is set at the equilibrium price c. is a Pareto improvement d. can turn an inefficient outcome into an efficient outcome e. creates more harm for buyers than gain for sellers