Explain the difference between the effects of a reduction in legal reserve requirements and the effects of an open-market purchase of securities by the Fed
The difference lies in the fact that an open-market purchase creates new reserves, which are deposited into
the banking system and which in turn creates a multiple expansion in the money supply. Lowering the
reserve requirement, while not creating new reserves allows the banking system to generate a larger
potential money multiplier that may increase the money supply.
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Given the information in the figure above, Liz has a comparative advantage in ________ because ________
A) smoothies; her opportunity cost of producing smoothies is lower than Joe's B) salads; her opportunity cost of producing salads is lower than Joe's C) smoothies; she can produce more smoothies per hour than Joe can D) salads; she can produce more salads per hour than Joe can E) both goods; she can produce more of both goods per hour than Joe can
The demand for a product is likely to be more elastic:
a. the smaller the share of the total budget spent on the product. b. when more complementary products are available. c. in the short run than in the long run. d. when more good substitutes for the product are available.
If a consumer always buys goods rationally, then
A) the total utilities of the different goods consumed will be equal. B) the average utilities of the different goods consumed will be equal. C) the marginal utility per dollar spent on all goods will be equal. D) the marginal utility of the different goods consumed will be equal.
The world's population increased so rapidly from 1800 to the present day because of higher:
A. Birthrates and lower standards of living B. Standards of living and higher birthrates C. Standards of living and lower death rates D. Death rates and higher standards of living