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Discount Rate in the Banking System
(a) Third National Bank is fully loaned up with reserves of $20,000 and demand deposits equal to $100,000. The reserve ratio is 20%. Households deposit $5,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.
(b) What is the discount rate in the banking system, and explain how the Fed manipulates this rate in order to achieve macroeconomic objectives.
All economics textbooks give examples that show diminishing marginal utility as consumption rises-However, it could be argued that a rational buyer should never experience negative marginal utility. Why?
Suppose that natural real GDP is constant. For every 1 percent increase in the rate of inflation above its expected level, firms are willing to increase real GDP by 2 percent.
Discuss how rapid inflation can undermine money's ability to perform each of the three functions.
Cindy gains utility from consumption and leisure. The most leisure she can consume in a week is 168 hours.
What do you think branded products usually are of higher quality than generic products and therefore justify their higher prices.
Illustrate what are the limits to long-term economic growth in the US.
In 1971, Congress conducted headings on emergency loan guarantee legislation for Lockheed Corporation, which was in the middle of a severe liquidity crisis due to losses on a number of military contracts.
Suppose Q is the quantity demanded for medical care services. The linear industry demand function takes the form.
Elucidate the relationship among budgeting and financial reporting in government.
Additionally, several other configurations were also estimated. The results are shown on the following pages. Based on this data, answer the following questions. Comment on the significance of time trend and seasonality.
Explain why user cost, or scarcity rent, arises in the intertemporal allocation of a depletable resource such as minerals, and some types of energy and aquifer water resources.
Is energy efficiency the same as economic efficiency? Explain. Under what circumstances would the energy-efficiency automobile described her be economic efficient?
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