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Unformatted text preview: marginal propensity to save and the multiplier? (1 point) 4. What is the difference between the discount rate and the minimum reserve ratio? (1 point) 5. Suppose that the Fed increases excess reserves in the banking system by $5 billion by buying $5 billion worth of bonds. If the reserve requirement is 20 percent, by how much can the money supply potentially increase? (1 point) 6. Give examples of contractionary fiscal and contractionary monetary policies? (1 point) 7. What is the meaning of absolute and comparative advantage? (1 point) Answer questions 8, 9 and 10 based on information provided below. Suppose US and Russia produce only two goods meat and potatoes in a weeks time according to the table below which shows their production possibilities. Meat Potatoes (lbs) (lbs) USA 2 4 Russia 5 20 8. Who has absolute advantage in each product? (1 point) 9. Who has comparative advantage in each product? (1 point) 10. What does each country export? (1 point)...
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- Spring '08
- Monetary Policy, marginal propensity, equilibrium GDP, full-employment output, appropriate fiscal policies