When a country can produce a good at a lower cost using the
same or reduced amount of resources.
An increase in the value of an asset.
Money set aside in a budget for specific purposes.
a. The increase in inflation will cause the U.S. dollar to have lesser value than the foreign dollar.
This is because inflation depreciates the U.S. dollar, which takes less of the foreign dollars to buy
an American good and it takes more U.S.
1. Deposit x reserve ratio = Amount of Required Reserves
(20,000)x = 40,000
40,000/200,000 = x
X = .2
The required reserve ratio is 20%
2. a) There is $25,000 of excess reserves so it can create $25,000/.2 = $125,000 of new loans if they
would favor in ke
The balance of the economy is very broken. The trade restrictions in place now, enable every country to
thrive, and stay an average or decent standard or living. However, if we participate in free trade, the
standard of living may decrease, because t
1. Correct axes
2. Correct direction of the graph
3. Correct numbers on the axes
4. Correct answer
5. Comparative Advantage
6. Absolute Advantage
Rubric for PPC graph
In order to show mastery of the concept,
i. MPC= change in Consumption/change in Income
= 43,000 - 40,000/4,000
MPC = 0.75
ii. MPS = change in savings/change in disposable income
= 2,000 1,000/4,000
MPS = 0.25
There isnt enough information to calculate MPC. In order to solve the problem, w
First of all, money spent by tourists in the Macro Islands moves thorough the economys circular flow
diagram like this. From the household sector, the household consumption moves to the product market
and from the product market, the go
1) Business inventories are basically the goods that may have been made now but are not yet sold
as a final product yet. They are counted into the GDP because the business produces more goods
than they actually, in real time, sell, then as a result of it,