Illustrate the effect of the Fed purchasing $50 million worth of mortgage-backed securities on the Fed's balance sheet
What will be an ideal response?
The Fed's assets increase as it acquires $50 million worth of securities and its liabilities increase by $50 million due to an increase in reserves.
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Holdouts who set a price for land above their opportunity cost and refuse to budge on selling their land for a lower price can reduce the size of the economic pie
Indicate whether the statement is true or false
An example of a good that is both rival and excludable is
A) the defense services provided by a new stealth bomber. B) a pair of pants. C) a beautiful sunset. D) an uncrowded theme park such as Walt Disney World.
In Lithasia, the marginal propensity to consume is 0.4, base consumption is $2,000 . the tax rate is 30 percent of income, national income is $4,000 . investment spending is $1,000 . government spending is $2,500, export earning is $1,500, and import spending is $3,000 . What is the aggregate expenditure of the economy?
To affect the market outcome, a price floor
A) must be set above the black market price. B) must be set above the legal price. C) must be set above the price ceiling. D) must be set above the equilibrium price.