Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?
In this case, the value of bank assets do not change. Recall, reserves and securities are recorded as assets for the bank. When the bank receives $50 of securities its assets increase by $50 . However, the purchase of securities decreased reserves by $50 . The net effect is no change in assets.
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Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones?
A) operating cost B) marginal cost C) explicit cost D) Any of the above terms are correct.
Which of the following is a valid characteristic of the U.S. economy over the last sixty years?
A) Investment is smoother than most of the other components of GDP, especially consumption. B) Government spending has remained around 20% of GDP over much of the postwar period. C) The U.S. has, for the most part, been running a trade surplus which has trended upward to over 5% of GDP. D) all of the above E) none of the above