Author Question: In equilibrium, what determines the price of capital and what determines the price of natural ... (Read 91 times)

Medesa

  • Hero Member
  • *****
  • Posts: 507
In equilibrium, what determines the price of capital and what determines the price of natural resources?
 
  What will be an ideal response?

Question 2

What actions should the Fed take if it believes the economy is about to fall into recession?
 
  What will be an ideal response?


emily12345

  • Sr. Member
  • ****
  • Posts: 321
Answer to Question 1

In equilibrium, the price of capital is determined by the intersection of the supply of capital curve and the demand for capital curve. Similarly, the equilibrium price of natural resources is determined by the intersection of the supply of natural resources curve and the demand for natural resources curve.

Answer to Question 2

If the Fed believes the economy is about to fall into recession, it should conduct expansionary monetary policy, increasing the money supply and reducing interest rates. In implementing expansionary monetary policy, the Fed could lower the discount rate, lower the reserve requirement, and/or have the trading desk purchase U.S. Treasury securities.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

Drying your hands with a paper towel will reduce the bacterial count on your hands by 45–60%.

Did you know?

Autoimmune diseases occur when the immune system destroys its own healthy tissues. When this occurs, white blood cells cannot distinguish between pathogens and normal cells.

Did you know?

More than 34,000 trademarked medication names and more than 10,000 generic medication names are in use in the United States.

For a complete list of videos, visit our video library