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Author Question: Illustrate the effect of the Fed purchasing 50 million worth of mortgage-backed securities on the ... (Read 57 times)

@Brianna17

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on: Jun 30, 2018
Illustrate the effect of the Fed purchasing 50 million worth of mortgage-backed securities on the Fed's balance sheet.
 
  What will be an ideal response?

Question 2

A ten percent increase in total factor productivity A will increase ________.
 
  A) the marginal product of capital (MPK) by ten percent
  B) the marginal product of labor (MPL) by ten percent
  C) output by ten percent
  D) all of the above
  E) none of the above


bassamabas

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The Fed's assets increase as it acquires 50 million worth of securities and its liabilities increase by 50 million due to an increase in reserves.

Answer to Question 2

C


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