Which of the following describes a situation in which, as the level of production of a good or service increases, the average cost of producing each individual unit decreases?

2.3 Discretionary Policy

What will be an ideal response?

How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and

firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.