Why is it more correct to say that the Fed (the central bank) controls the monetary base than to say it controls the amount of reserves?
What will be an ideal response?
The Fed, or any central bank, can create and destroy the monetary base by changing the size of its balance sheet. What it can't control is the currency holdings of the public. If people decide to hold more currency than the banking system will be depleted of reserves, but the monetary base does not change since it is the sum of reserves and public currency holdings.
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If Dawson prefers pizza to hamburgers and hamburgers to hot dogs, then if preferences are transitive
A) she must prefer pizza to hot dogs. B) she could prefer hamburgers to pizza on some occasions but not hot dogs to pizza. C) she could prefer hot dogs to pizza on some occasions but not hamburgers to hot dogs. D) at times she could be indifferent among the three items.
In high schools, all teachers were paid the same based on years of service and regardless of specialization. Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer. At the same time, a decline in the number of school-age children tended to reduce the demand for all other teachers, which led to a
surplus. The economist's solution to this problem would be a. merit pay to reward the best teachers. b. recognition that all teachers do comparable work and should be paid the same. c. to raise the wages of all teachers. d. to raise the wages of teachers in fields that are in short supply and lower those of others.