Explain how a change in the money supply can affect the following in the short run: a. The supply of loanable funds b. Real GDP c. The price level d. The expected inflation rate
a. As the Fed increases the money supply (for example, with an open market purchase) reserves in the banking system rise, giving banks the ability to extend more loans. Therefore, the supply of loans rises.
a. As the money supply increases, the AD curve shifts rightward and Real GDP rises in the short run.
b. As the money supply increases, the AD curve shifts rightward and the price level rises in the short run.
c. Given that an increase in the money supply leads to a rising price level, it is reasonable to assume that the expected inflation rate would rise, as well.
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Explain the difference between diminishing returns to labor and diminishing marginal returns to labor
What will be an ideal response?
On the job training:
a. is an important component for building human capital b. may be just as important as formal education in raising productivity c. is less amenable to influence by the government d. All of the above are correct.