This topic contains a solution. Click here to go to the answer

Author Question: What does it mean when a free lunch is available? Relate your answer to the production possibilities ... (Read 85 times)

ENagel

  • Hero Member
  • *****
  • Posts: 540
What does it mean when a free lunch is available? Relate your answer to the production possibilities frontier.
 
  What will be an ideal response?

Question 2

How does a currency drain affect the money multiplier?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

blazinlyss

  • Sr. Member
  • ****
  • Posts: 333
Answer to Question 1

A free lunch means that there is no tradeoff, that is, the production of one good or service can be increased without decreasing the production of another good or service and thereby giving up some of the other good. A free lunch occurs when the economy is producing at a point within the production possibilities frontier because at these points some resource is unemployed. By utilizing the unemployed resource, more goods or services can be produced without giving up any other goods or services.

Answer to Question 2

If the currency drain is zero so that all money created is deposited in bank accounts, the money multiplier is equal to one divided by the desired reserve ratio. If the currency drain is positive, then some newly created money is held in cash and is not deposited in bank accounts. In this case, the money multiplier is smaller so that a change in the monetary base leads to a smaller change in the quantity of money.




ENagel

  • Member
  • Posts: 540
Reply 2 on: Jun 29, 2018
Excellent


daiying98

  • Member
  • Posts: 354
Reply 3 on: Yesterday
Gracias!

 

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Did you know?

When blood is exposed to air, it clots. Heparin allows the blood to come in direct contact with air without clotting.

Did you know?

In 1844, Charles Goodyear obtained the first patent for a rubber condom.

For a complete list of videos, visit our video library