ECO 545 Week 5 Quiz

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<![if !supportLists]>1. <![endif]>Suppose that the reserve requirement is 5%. What is the effect on the total checkable deposits in the economy if banks reserves increased by \$60 billion?

<![if !supportLists]>2. <![endif]>The formula for the simple deposit multiplier is? <![if !supportLists]>3. <![endif]>(Related to Solved Problem # 1) Suppose that simple economy produces only the following goods and services; shoes, hamburgers, shirts and cotton. Further, assume that all of the cotton is used in the production of shirts.

Use the information in the following table to calculate Nominal Gross Domestic Product ( NGDP) for 2015. <![if !supportLists]>4. <![endif]>Why might cutting government spending as a fiscal policy be a more difficult policy than the use of the monetary policy to slow down an economy experiencing inflation?

<![if !supportLists]>A. <![endif]>The legislative process works quickly <![if !supportLists]>B. <![endif]>The government has more concentrated power than the Fed <![if !supportLists]>C. <![endif]>The economy may have already slowed <![if !supportLists]>D. <![endif]>The Legislative process experiences longer delays than monetary policy

<![if !supportLists]>5. <!*endif+>Suppose that Deja owns a McDonaldâ&#x20AC;&#x2122;s franchise. She decides to move her restaurantâ&#x20AC;&#x2122;s checking account to Wells Fargo, which causes the changes shows on the following Taccount Reserves:

-\$100,000

Deposits:

\$100,000

If the required reserve ratio is 0.05 percent and Wells Fargo currently has no excess reserves, the maximum loan Wells Fargo can make as a result of this transaction is

<![if !supportLists]>6. <![endif]>(related to solved problem #3) Suppose the information in the following table is simple economy that produces only the following four goods; shoes, hamburgers, shirts and cotton. Further, assume that all of the cotton is used to produce shirts.

<![if !supportLists]>7. <![endif]> Suppose the economy is initially in long run equilibrium. The Fed enacts a policy to decrease the discount rate. In the short run, this expansionary monetary policy will cause;

<![if !supportLists]>a. <![endif]>A shift from SRAS to SRAS2 and a movement to point B, with a lower price level and higher output. <![if !supportLists]>b. <![endif]>A shift from AD1 to AD2 and a movement to point B, with a higher price level and a higher output. <![if !supportLists]>c. <![endif]>A shift from SRAS2 to SRAS1 and a movement to point D, with a higher price level and a lower output. <![if !supportLists]>d. <![endif]>Shift from AD2 to AD1 and a movement to point C with a lower price level and the same output.

<![if !supportLists]>8. <![endif]>Excess Reserves <![if !supportLists]>a.

<![endif]>Are the deposits that banks do not use to make loans

<![if !supportLists]>b. <![endif]>Are loans made at above market interest rates <![if !supportLists]>c.

<![endif]>Are reserves banks keep to meet the reserves requirement

<![if !supportLists]>d. <![endif]>Are reserves banks keep above the legal requirement

<![if !supportLists]>9. <![endif]>A simple economy produces two goods, Apple pies and software. Price and Quantity data are as follows;

<![if !supportLists]>10.

<![endif]>Consider the following table;

<![if !supportLists]>11. <![endif]> What can we expect from the Federal Reserve Bank if it seeks to move the economy in the direction of a long run macroeconomics equilibrium?

<![if !supportLists]>a.

<![endif]>The Fed will pursue an expansionary fiscal policy

<![if !supportLists]>b. <![endif]>The Fed will pursue a contractionary monetary policy <![if !supportLists]>c.

<![endif]>The Fed will pursue an expansionary monetary policy

<![if !supportLists]>d. <![endif]>The Fed will pursue a contractionary fiscal policy What will happen to the showing indicators? Actual Real GDP; Potential Real GDP; Price Level; Unemployment <![if !supportLists]>12. <![endif]>Suppose you deposit a \$800 cash into your checking account; By how much will the total money supply increase as a result when the required reserve rate is 0.10?

<![if !supportLists]>13. <![endif]>The Federal Reserve cannot affect Real GDP directly, therefore, the Fed typically uses the following as its policy target?

<![if !supportLists]>a.

<![endif]>Inflation

<![if !supportLists]>b. <![endif]>Government expenditures <![if !supportLists]>c.

<![endif]>Taxes

<![if !supportLists]>d. <![endif]>Interest rates <![if !supportLists]>14. <![endif]>If the Federal Reserve purchases \$130 million worth of US treasury bills from the public, the money supply will

<![if !supportLists]>15.

<![if !supportLists]>a. unemployed.

<![endif]>The unemployment rate;

<![endif]>Shows the percentage of the population that is considered

<![if !supportLists]>b. <![endif]>Is the amount of the labor force that is not working <![if !supportLists]>c.

<![endif]>Is the amount of people in the population that are not working

<![if !supportLists]>d. <![endif]>Shows the percentage of the labor force that is considered unemployed.

<![if !supportLists]>16. <![endif]>When the Federal Reserve increases the discount rate as a part of a contractionary monetary policy, there is; <![if !supportLists]>a.

<![endif]>A decrease in the money supply and an increase in the interest rate

<![if !supportLists]>b. <![endif]>A decrease in the money supply and a decrease in the interest rate <![if !supportLists]>c.

<![endif]>An increase in the money supply and a decrease in the interest rate

<![if !supportLists]>d. <![endif]>An increase in the money supply and an increase in the interest rate

<![if !supportLists]>17. <![endif]>Suppose the economy is in long run equilibrium, the Fed decides to increase the discount rate, in the short run, this contractionary monetary policy will cause;

<![if !supportLists]>a. <![endif]>A shift from SRAS 1 to SRAS2, and a movement to point A, with a higher price level and same output <![if !supportLists]>b. <![endif]>A shift from SRAS 2 to SRAS 1 and a movement to point B, with a lower price level and a higher output <![if !supportLists]>c. <![endif]>A shift from AD2 to AD1 and a movement to point D with a lower price level and lower output <![if !supportLists]>d. <![endif]>A shift from AD1 to AD2 and a movement to point B with a higher price level and higher output

<![if !supportLists]>18. <![endif]>According to the multiplier effect, an initial decrease in the government purchases decrease the real GDP by initial decrease in government purchases.

<![if !supportLists]>19. of this total;

<![endif]>In an economy, the working age population is 300 million

240 million workers are employed 9 million workers are unemployed 42 million workers are not available for work (homemakers, full time students, etc) 6 million workers are available for work, but are discourage, and thus are not seeking work 3 million workers are available for work but are not currently seeking work due to transportation and child care problems. The unemployment rate in this economy <![if !supportLists]>20. <![endif]>Suppose you deposit \$1,000 cash into your checking account, By how much will checking deposits in the banking system increase as a result when the required reserve ratio is 0.40%

The change in checking deposit is equal

<![if !supportLists]>21. <![endif]>Suppose the government increases expenditures by \$110 billion and the marginal propensity to consume is 0.80 . By how will equilibrium GDP change? The change in equilibrium GDP

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ECON 545 All Weeks Discussion (DEVRY)

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DEVRY ECON 545 Week 1 DQ 1 Supply and Demand DEVRY ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage DEVRY ECON 545 Week 2 DQ 1 Marginal Analysis DEVRY ECON 545 Week 2 DQ 2 Controlling Costs DEVRY ECON 545 Week 3 DQ 1 Mergers Acquisitions DEVRY ECON 545 Week 3 DQ 2 Anti-Trust Policy and Microsoft DEVRY ECON 545 Week 4 DQ 1 Macroeconomic News DEVRY ECON 545 Week 4 DQ 2 Healthcare DEVRY ECON 545 Week 5 DQ 1 Trade Deficits DEVRY ECON 545 Week 5 DQ 2 Exchange Rates DEVRY ECON 545 Week 6 DQ 1 Fiscal Policy DEVRY ECON 545 Week 6 DQ 2 Monetary Policy DEVRY ECON 545 Week 7 DQ 1 The Public Sector DEVRY ECON 545 Week 7 DQ 2 Forecasting

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ECON 545 Entire Course + Final Exam

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ECON 545 Week 1 DQ 1 Supply and Demand ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage ECON 545 Week 2 DQ 1 Marginal Analysis ECON 545 Week 2 DQ 2 Controlling Costs ECON 545 Week 3 DQ 1 Mergers Acquisitions ECON 545 Week 3 DQ 2 Antitrust Policy ECON 545 Week 3 Course Project 1 Microeconomic Analysis (Situation C) ECON 545 Week 4 DQ 1 Current Topic in Macroeconomics ECON 545 Week 4 DQ 2 Healthcare ECON 545 Week 5 DQ 1 Trade Deficits ECON 545 Week 5 DQ 2 Exchange Rates ECON 545 Week 6 DQ 1 Fiscal Policy ECON 545 Week 6 DQ 2 Monetary Policy ECON 545 Week 6 Course Project 2 Macroeconomic Analysis (Situation C) ECON 545 Week 7 DQ 1 The Public Sector ECON 545 Week 7 DQ 2 Forecasting ECON 545 Week 8 Final Exam

******************************************* ECON 545 Final Exam Set 2

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1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets. (a.) (15 points) You know from data collected on the Widget Market that market demand has recently decreased and market supply has recently increased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility? Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market. (b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes down in price, and your costs of production decrease. What new decisions will you make regarding production levels and pricing for your Widget facility? 2. (TCO B) Suppose the governor of California has proposed increasing toll rates on California's toll roads, and has presented two possible scenarios to implement these increases. Following are projected data for the two scenarios for the California toll roads: Scenario 1: Toll rate in 2012: \$10.00. Toll rate in 2016: \$22.50 For every 100 cars using the toll roads in 2012, only 81.6 cars will use the toll roads in 2016. Scenario 2: Toll rate in 2012: \$10.00. Toll rate in 2016: \$17.50 For every 100 cars using the toll roads in 2012, only 96.2 cars will use the toll roads in 2016. 3. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. Total

Total

. (TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for Johnâ&#x20AC;&#x2122;s firm operating in pure competition: (a.) (15 points) Refer to the above data. If the product price is \$60, at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be?

Show all calculations. (b.) (15 points) Refer to the above data. If the product price is \$55 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

5. (TCO D) A software producer has fixed costs of \$30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below: a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.) (b.) (15 points) What should be the production level if fixed costs rose to \$50,000 per month? Explain. 6. (TCO F) (a.) (20 points) Suppose nominal GDP in 1999 was \$100 billion and in 2001 it was \$270 billion. The general price index in 1999 was 100 and in 2001, it was 150. Between 1999 and 2001, the real GDP rose by what percent? (b.) Use the following scenario to answer questions (b1.) and (b2.). In a given year in the United States, the total number of residents is 170 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million. (b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year? (b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? 7. (TCO G and H) (a.) (15 points) Suppose your local Congress representative suggests that the federal government should NOT intervene in the baseball ticket market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be briefâ&#x20AC;&#x201D;you can answer this in 2 or 3 brief paragraphs). (b.) (10 points) Any change in the economyâ&#x20AC;&#x2122;s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as

the multiplier effect. Explain how the multiplier effect works. (c.) (15 points) You are told that 75 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals \$25 billion. 8. (TCO G) (a.) Reserve requirement for banks is set at 5%. Your firm withdraws \$42,000 on its line of credit at the Security Bank to purchase equipment for expansion. The equipment vendor deposits the amount that he receives from you at his bank, The Highland Bank. (10 points) By how much has each bankâ&#x20AC;&#x2122;s excess reserves changed as a result of your withdrawal and expenditure? (10 points) What is the maximum amount of new money that can be created in the banking system as a result of your purchase? Show all work. (b.) (10 points) suppose that the Security Bank discovers its reserves will temporarily fall slightly short of those legally required. How might it remedy this situation through the Federal Funds market? (10 points) Explain how the Fed manipulates the Federal Funds Rate in order to achieve macroeconomic objectives.

9. (TCO E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is an increase in U.S. interest rates relative to that of Japan. (a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why? (b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen? (c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan before and after the change in the exchange rate.

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ECON 545 Week 1 DQ 1 Supply and Demand

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What is the difference between a change in demand versus a change in quantity demanded? A change in supply versus a change in quantity supplied? Why is it so important to differentiate between these similar-sounding terms?

******************************************* ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage

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What are your thoughts about minimum wage legislation? What kind of a price-control policy is this? Who gains? Who loses? Are there alternatives to this legislation for achieving the same policy objectives? What role do demand and supply elasticities play in determining outcomes?

******************************************* ECON 545 Week 2 DQ 1 Marginal Analysis

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Why is marginal analysis important in economics? How do the tutorials Basics of Marginal Analysis and Understanding and Applying Marginal Analysis at the end of this week's lecturereinforce the concepts of marginal analysis? How can any firm find the right production level which guarantees maximum profit (or minimum loss)?

******************************************* ECON 545 Week 2 DQ 1 Perfect Competition(NEW)

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Read the Making the Connection short case titled In the Apple iPhone Apps Store, Easy Entry Makes the Long Run Pretty Short in Chapter 12 of our textbook, and also be sure to watch the video right under the Making the Connection title (maybe a few times). Then post your first posting this week beginning to discuss what you’ve read and watched in the video.

Then work on Problems and Applications 5.9, at the end of Chapter 12, answering and discussing the questions in that exercise.

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ECON 545 Week 2 Quiz

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<![if !supportLists]>1. <![endif]> Consider the market for ping golf clubs. Suppose the price of memberships at local golf courses increases. Use the line drawing tool to show how this affects the demand for ping golf clubs by drawing a new demand curve. Assume memberships at local golf courses and ping golf clubs are complements. Properly label this line. Instead, suppose the price of tennins rackets decreases. If tennis rackets and goal substitutes, then the demand for ping golf clubs will ………..

<![if !supportLists]>2. <![endif]>State whether each of the following events will result in a movement along the demand curve for McDonald’s Big Mac hamburgers or whether it will cause the curve to shift <![if !supportLists]>a. cause

<![endif]> The price of Burger King’s Whopper hamburgers declines. This will

<![if !supportLists]>b. <![endif]> McDonald’s eliminates \$1.00 off coupons. This will cause c-d) KFC raises the price of a bucket of fried chicken. This will e) The U.S economy enters a period of decline in incomes. This will cause

<![if !supportLists]>3. <![endif]>Imagine that the table on the right shows the quantity demanded of UCG boots at fine different prices in 2014 and in 2015. Which of the following variables could cause the demand for UCG boots to change as indicated from 2014 to 2015?

<![if !supportLists]>4. <![endif]>Imagine that the curves shown in the accompanying figure represent two demand curves for traditional wings (basket of six) at Buffalo Wild Wings. The movement from point A to B on Dl is caused by Indicate which of the following would cause a movement from point A to C. (Check al that apply) The difference between a change in supply and a change in the quantity supplied is that the latter is

<![if !supportLists]>5. <![endif]>Suppose the curves in the figure to the right represent two supply curves for traditional wings (basket of six) at Buffalo wild Wings The movement from point A to B os S1 is caused by

Indicates which of the following would cause a movement from point A to C

<![if !supportLists]>6. <![endif]>Suppose that the table on the right shows the quantity supplied of UCG boots at five different prices in 2014 and in 2015 Refer to the table to the right note the change in the quantity supplied of UCG boots from 2014 to 2015 Which of the following variables could explain the change in the quantity supplied observed in 2015? If the market price ‘Pmkt’ is equal to the price ‘Po’, then quantity supplied is ……. Quantity demanded and the market is in …….

<![if !supportLists]>7. <![endif]>Consider the market for gasoline, illustrated in the figure to the right. The equilibrium quantity of gasoline is … million gallons and the equilibrium price \$......per gallon If instead the market price were \$1.75, then there would be a …….. of … million gallons

<![if !supportLists]>8. <![endif]>If a 22 percent increase in the price of cheerios causes a 27 percent reduction in the number of boxes of cereal demanded, the price elasticity of demand for cheerios is ………. The demand for cheerios is ……

<![if !supportLists]>9. <![endif]>The following table gives data on the price of rye and the number of bushels of rye sold in 2013 and 2014 <![if !supportLists]>a. <![endif]>Calculate the change in the quantity of rye demanded divided by change in the price of rye. Measure the quantity of rye demanded in bushels. The change in the quantity of rye demanded divided by the change in the price of rye in bushels is……… <![if !supportLists]>b. <![endif]>Calculate the change in the quantity of rye demanded divided by change in the price of rye, but this time measure the quantity of rye demanded in million of bushels. The change in the quantity of rye demanded divided by the change in the price of rye in million bushels is……… Compare to part a, the answer to part b is ……. In absolute terms

<![if !supportLists]>c. <![endif]>Finally assuming the demand curve for rye did not shift between 2013 and 2014, use the information in the table to calculate the price elasticity of demand for rye. Using the midpoint formla, the price elasticity of demand for rye is ….

<![if !supportLists]>10.

<![endif]> Suppose the price elasticity of demand for cereal is -0.83.

If so then the price for demand for cereal is….. In another example, assume the price elasticity of demand for a particular magazine is ……. The price elasticity of demand for the magazine is ….

<![if !supportLists]>11. demand is perfectly inelastic

<![endif]> Consider the polar case where the price elasticity of

Use the line drawing tool to draw a perfectly inelastic curve.

<![if !supportLists]>12. to the right

<![endif]> Consider the two demand curves illustrated in the figure

Which of the two is relatively more elastic?

<![if !supportLists]>13. <![endif]> Suppose that Bill owns an automobile collision repair shop and the table below shows the quantity of cars repaired per month according to how many workers Bill hires. Assume he pays each worker \$6,000 per month and his fixed cost equals \$5,000 per month

<![if !supportLists]>14. <![endif]> Suppose a pizza parlor has the following production costs: \$5.00 in a labor per pizza, \$4.00 in ingredients per pizza, \$0.80 in electricity per pizza, \$1,000 in restaurant rent per month, and \$5550 in insurance per month Assume the pizza parlor produces 6,000 pizzas per month What is the variable cost of production is ….? What is fixed cost of production The fixed cost of production is \$...

<![if !supportLists]>15. <![endif]>The table below shows the quantity of workers and total output for a local pizza parlor. Answer the following questions based on this table <![if !supportLists]>a. pizzas

<![endif]>When the owner hires 4 workers, the average product of labor is â&#x20AC;Ś..

<![if !supportLists]>b. <![endif]>The marginal product of fifth worker is <![if !supportLists]>c. <![endif]>If the marginal product of the second worker is 6, then total number of pizzas produced when 2 workers are hired is ,,, pizzas <![if !supportLists]>d. <![endif]>Assuming the marginal product of the second worker is 6, the law of diminishing marginal returns set in with the

<![if !supportLists]>16. competitive?

<![endif]>What are the three conditions for a market to be perfectly

<![if !supportLists]>17.

<![endif]>What is a price taker?

<![if !supportLists]>18. <![endif]>Consider the graph below showing the market demand and supply for com. Use the line drawing tool to graph the demand for com produced by one farmer, properly label this line

<![if !supportLists]>19.

<![endif]> Which of the following are perfectly competitive markets?

<![if !supportLists]>20.

<![endif]> Refer to the following table?

Suppose the price of what rises to \$5.00 per bushel. Farmer parker will maximize profits by producingâ&#x20AC;Ś. Bushels of wheat. He will make a profit of \$.........

<![if !supportLists]>21. and profit from wheat farming

<![endif]> The following table shows Farmer Parkerâ&#x20AC;&#x2122;s revenue, cost,

Farmer parker’s fixed costs are \$ Suppose that fixed cost increase by …… Farmer parker’s new profit-maximizing level of production after the increase in fixed cost is …. The amount of profit that farmer parker will earn after increase in fixed cost is …..?

<![if !supportLists]>22. shown in the table below

<![endif]> Sophia grows Christmas tree. Her cost of production is

Suppose the market for Christmas tree is perfectly competitive and that market price for Christmas tree is \$152 per tree How many Christmas tree should Sophia grow? What is Sophia’s profit?

<![if !supportLists]>23. <![endif]> Frances sells earnings in the perfectly competitive earning market. Her output per day and costs are seen in the table to the right. <![if !supportLists]>a. <![endif]>Of the current equilibrium price in the earing market is \$1.80, what price will Frances charge? <![if !supportLists]>b. <![endif]> Find the correct quantities for the missing values in the table <![if !supportLists]>c.

<!*endif+>What quantity of earings will maximize France’s Profit?

<![if !supportLists]>24. <![endif]> The fig to be illustrates the average total cost (ATC) and marginal cost (MC) curves for an orange farmer in California. Assume market for oranges is perfectly competitive Suppose the market price of orange is \$28.00 per crate

<![if !supportLists]>25. perfectly competitive firm?

<![endif]> Which of the following is an expression of profit for a

Profit for a perfectly competitive firm can be expressed as

<![if !supportLists]>26. <![endif]> Farmer brown grows a peaches. The average total cost and marginal cost of growing peaches for an individual farmer are illustrates in the graph to right Assume the market for peaches is perfectly competitive and that the market price is \$38 per box. Also assume that farmer Brown is producing the amount of peaches that maximizes profits.

<![if !supportLists]>27. <![endif]> Lauren grows grapes. Her average variable cost (AVC), average total cost (ATC), and marginal cost (MC) of production are illustrated in fig to the right Assume the market for grapes is perfectly competitive and the market price is \$4.00 per crate Characterize Laurenâ&#x20AC;&#x2122;s economic profits. Assume she produces such that she maximizes profits in short run

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ECON 545 Inspiring Innovation--snaptutorial.com

For more classes visit www.snaptutorial.com <![if !supportLists]>1. <![endif]>Suppose that the reserve requirement is 5%. What is the e...

ECON 545 Inspiring Innovation--snaptutorial.com

For more classes visit www.snaptutorial.com <![if !supportLists]>1. <![endif]>Suppose that the reserve requirement is 5%. What is the e...

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