EBK EXPLORING ECONOMICS
7th Edition
ISBN: 9780100544772
Author: Sexton
Publisher: YUZU
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Chapter 25, Problem 24P
To determine
(a)
To explain:
The impact on money supply if there is an increase in the reserve requirementby Fed.
To determine
(b)
To explain:
The impact on money supply if an open market sale of government bonds is made by Fed.
To determine
(c)
To explain:
The impact on money supply if there is an increase in the discount rate by Fed.
To determine
(d)
To explain:
The impact on money supply if an open market sale of government bonds is made by Fedand also the Fed increases the discount rate.
To determine
(e)
To explain:
The impact on money supply if an open market purchase of government bonds is directed by Fed and Fed raises the reserve requirements.
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Price level (GDP deflator, 2009=100)
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Millennials, who spend an average of $85 a day, are expected to spend at a higher rate in the next fifteen years.
Only 37 percent of Americans report higher spending today than a year ago, while 42 percent of millennials say
they are spending more. Millennials are spending more on rent or mortgages and leisure activities than they
were spending a year ago.
140-
130-
Source: Business Journal, May 25, 2016
120-
Describe the macroeconomic equilibrium after the change in spending by millennials.
If the economy had been at a below full-employment equilibrium, then the economy will
A. move to an above full-employment equilibrium with real GDP less than potential GDP
B. move to a full-employment equilibrium as short-run aggregate supply increases at the same time
'C. move to a full-employment equilibrium and equilibrium real GDP equals potential GDP
D. remain stuck in a below full-employment equilibrium
If the economy…
Wolfgang is a typical producer in a perfectly
competitive piano industry (i.e., all other producers of
pianos face the same costs as Wolfgang). The
following production and cost data apply to the long run
as well as the short run. Fixed costs (rent) are
unrecoverable in the short run and are equal to $2400
per month. Variable costs consist of raw
materials (wire, wood, plastic), which cost $1000
per piano, and the $40 per hour opportunity cost
of Wolfgang's time. Wolfgang's production function is
given in the table at right.
Wolfgang will shut down if the price per piano is less
than
OA. $3000.
B. $4000.
O C. $5000.
○ D. None of the above.
Pianos (Q)
Hours (L)
Raw Materials (
0
0
0
1
100
1000
2
150
2000
3
240
3000
4
400
4000
P2
P₁
$ per unit
Using the graph below, determine which statement is TRUE.
MC1
SRATC₁
Q1
Q₂
MC2 SRATC2
LRAC
✓ LEA
Quantity
Chapter 25 Solutions
EBK EXPLORING ECONOMICS
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