Suppose the Federal Reserve System has a required reserve ratio of 0.20. If the Open Market Committee sells $10 billion of securities to the commercial banking system, then before the money multiplier takes effect, initially excess reserves
A. Increase by $10 million.
B. Increase by $50 billion.
C. Decrease by $10 billion.
D. Decrease by $50 billion.
Answer: C
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Counter cyclical policies ________
A) increase the intensity of economic fluctuations B) lead to hyperinflation C) smooth the rate of growth of the economy over time D) lower output below its potential level
What is productivity?
What will be an ideal response?
At an output of 156, MC = $17, ATC = $17, and MR = $18. At that output the firm is
A. maximizing its profits, but not operating at peak efficiency. B. maximizing its profits and operating at peak efficiency. C. operating at peak efficiency, but not maximizing its profits. D. neither operating at peak efficiency nor maximizing its profits.
Under a monopoly, resources are misallocated such that
A. too few resources are used by the monopoly, and too many are used elsewhere. B. consumers are being forced to pay a price below the MC of the monopolist. C. resources are being used as efficiently as possible only by the monopoly. D. too few resources are used in other industries, and too many are used by the monopoly.