Explain the impact on the Fed's balance sheet from a $10 million open market purchase of U.S. Treasury Securities. Be sure to identify which categories of assets and liabilities change and by what amounts.
What will be an ideal response?
The purchase of the Treasury securities will increase the asset category called Securities by the amount of $10 million, which is usually the largest asset category for most central banks. The liability category of Reserves will also increase by $10 million. This is done as the Fed will credit the appropriate bank(s) reserve account(s) to pay for the securities. This reflects the Fed's ability to pay for assets by simply creating liabilities.
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The above table shows Homer's marginal utility from consuming various quantities of chocolate chip cookies and cake. The price of cookies is $1 per pound, the price of cake is $2 per slice and Homer has $9 to spend on cookies and cake
Homer will consume ________ pounds of cookies and ________ slices of cake. A) 5; 2 B) 2; 5 C) 3; 3 D) None of the above answers is correct.
Dealers get much of their government securities inventories
A) through direct transfers from the Treasury. B) through direct transfers from the Federal Reserve. C) bidding at competitive auctions. D) through purchases from commercial banks.
The cost incurred from the production of an additional unit of a product
A) is a marginal cost to the firm. B) is called a loss. C) is called opportunity cost. D) must be zero for a firm to be efficient.
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases. B. initially decreases, then increases. C. decreases. D. initially increases, then decreases.