1 The open market operations of the Federal Reserve can directly affect interest
ID: 1126891 • Letter: 1
Question
1 The open market operations of the Federal Reserve can directly affect interest rates as well as the reserve position of member banks. 2. The marginal and average propensities to consume are the same for most families. 3·The economic cost of unemployment is wasted resources and output that the society foregoes. 4. When the Federal Reserve raises rediscount rates, this makes it easier for the banks to lend more, GDP is measured in dollar terms rather than in terms of units of outputs. 6· The Fed Chairman is Paul Volker. 7. 5. The multiplier effect depends on the fact that people consumers at least a part of their incremental income. The expansionary effect of government deficit spending is least when funds are borrowed from the banks. 8 9. The relationship between total spending, employment, output and price level are generally direct. 10. Currency is the main form of money in the U.S 11. US has no deficit problem, the problem is politics.Explanation / Answer
Hi, there are many subparts in the question, we are allowed to do 4 sub parts, i have solved 8 questions below . For rest please ask as a seperate question
1) Frictional unemployment is
Sol A) people who are changing jobs or are unemployed
2) Structural unemployment refers to
Sol b) Persons unemployed because their skills are not matching with job openings
3) The basic determinants of the productive capacity of an economy are
Sol c) Labor skills, resources and level of technology
4) Investment decision in modern economy are mostly made by business. Most important exception is the decision to
Sol b) buy stocks and bonds
5) As compared to consumption spending, investment spending is
Sol b) More widely fluctuating
6) The term marginal efficiency of investment means
Sol b) expected rate of return on new investment
7) money in modern US ECONOMY CONSISTS
Sol A) about 25% coins currency and 75% demand deposits
8) Basic control over supply of money is existence is in the hands of
Sol d) Federal reserve system
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