Explain and demonstrate graphically how targeting the federal funds rate can result in fluctuations in nonborrowed reserves
What will be an ideal response?
See figure below.
With a federal funds rate target, fluctuations in demand for reserves require similar changes in the nonborrowed reserves to keep the federal funds rate constant.
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Depending on the shape of the marginal cost curve, a monopolist might produce an output level on the elastic or the inelastic part of demand.
Answer the following statement true (T) or false (F)
Discuss the Smoot-Hawley tariff and its economic repercussions
What will be an ideal response?
Advocates of floating rates pointed out that
A) removal of the obligation to peg currency values would restore monetary control to central banks. B) imposing of the obligation to peg currency values would restore monetary control to central banks. C) removing of the obligation to peg currency values would restore fiscal control. D) imposing of the obligation to peg currency values would restore fiscal control. E) imposing of the obligation to peg currency would restore monetary control to the consumer.
The above figure depicts the Edgeworth box for two individuals, Al and Bruce. Points a and b
A) are most likely to reflect the final allocations after trading. B) are least likely to reflect the final allocations after trading. C) are equally likely to reflect the final allocations after trading than other points on the contract curve. D) are definitely not the final allocations after trading.