Why does the money supply increase when the Fed buys a bond but does NOT change when a business buys a bond?
What will be an ideal response?
The reserves in the banking system increase when the Fed buys bonds but remain unchanged when a business buys bonds. When a business buys bonds, a check is written on one bank and deposited in another. The reserves of one bank increase but fall in the other, so there is no net change. When the Fed buys bonds, reserves increase in a bank but don't decrease anywhere else since the Fed can add to the reserves of a member bank.
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Individuals who have stopped looking for work because they are convinced that they will not find a job are considered
A) discouraged workers. B) part of the labor force. C) structurally unemployed. D) underemployed.
The marginal revenue product schedule is a
A. demand schedule for a final product. B. demand schedule for a resource. C. supply schedule for a final product. D. supply schedule for a resource.
The authors argue that successful corporations assign decision rights in ways that
A. completely eliminate the potential for fraud. B. effectively link decision-making authority with good information. C. structure moneymaking tools for all employees. D. rely on monitoring and evaluation for all creativity.
If you leave your money in the bank at a fixed interest rate and allow for compounding of interest, show what will happen to your savings over time. Indicate with a graph whether there is a negative or positive slope between savings and time and what happens to the slope over time.
What will be an ideal response?