A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:

What problem is addressed by a government safety net for the banking system? What problem is caused by the safety net?

What will be an ideal response?

If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?

A. Recall Federal Reserve Notes from circulation. B. Raise the legal reserve requirement. C. Buy bonds in the open market. D. Raise the discount rate.