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Money Creation and Open Market Operations.
a. Briefly explain in words how the “money multiplier” is supposed to work (i.e., how, under the “textbook view” of banking operations, a Fed purchase of Treasury securities is said to result in a multiplied expansion of the quantity of money in circulation). You may want to refer to Wright (2012) sections 14.2–14.3 (pg.313–321). What does Wright say are the limitations of this model of money creation? Also, discuss what options a bank would have if they had a lending opportunity, but didn’t have the reserves available for payment of the loan; what does this mean for the money multiplier story?
b. As we discussed in class, the Fed has not used money supply targets as a basis for open market operations since the early 1980s. What does the Fed use as a target instead? What actions does the Fed take to achieve this target?
find marginal cost of last unit produced. What is firms percentage mark-up of price over marginal cost.
How is elasticity related to revenue. How is diminishing marginal returns related to cost. How are revenues and costs related to profit.
Suppose that the price of Hershey’s chocolate increases. What would happen to equilibrium price and quantity in the market for Godiva chocolate? Be able to draw the graph that illustrates your answer.
what should you do when the manager of a perfectly competitive firm whose short run cost is TC = 100 + 160Q + 3Q2. If the market price is $196.
The elasticity of demand is: Whether buyer or sellers pays more of a commodity tax depends on:
Most labor economists believe that the supply of labor is..
After the FOMC announces a change in the target fed funds rate, the Fed's trading desk in New York engages in a(n) _____ open market operation.
q.suppose you are attempting to buy a used bicycle and you are bargaining with the owner over the sale price. the bike
q1. the third largest city of a country has a population of 12.5 million. using the ranksize rule what is the
Some lenders charge an up-front fee on a loan, which is subtracted from what the borrower receives. This is typically described as "points" (where one point equals 1% of the loan amount). The federal government requires that this be accounted for in ..
Explain how large a decline in the value of bank assets would it take to reduce this bank's capital to zero.
Social responsibility other than to make as much money for their stockholders as possible. Explain why you agree or disagree with such a statement.
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