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Suppose that the banking system is initially "loaned up" and all banks have a 30% required reserve ratio. Total transactions deposits in the system are $100 billion. If the Federal Reserve wishes the money supply to increase by an additional $20 billion, the Federal Reserve could:
Answer Reduce the require ratio to 25%
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If air quality improves however re are no effects on aggregate production or on market costs of final goods and services. Illustrate what would happen to GDP.
Elucidate what impact will this change have on the price level, output, and employment in the short run in the United States.
In the short run the typical company increases its output but its total cost also rises. Hence, the effect on the company 's profit cannot be determined without more information.
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Illustrate what would have been the welfare implications of a ban on oil imports.
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In uncertain times, especially when the economy is experiencing a downturn, consumer spending tends to decline also savings rates tend to rise
Compare the effects of the two policies, based on the models developed. Why might the United States have preferred one policy over another.
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