Monetary Policy
Go to http://www.tradingeconomics.com/indicators to help find the current values.
1.What are the components of M-1?
2. What is the total value of M-1 for the most recent period? _________________
3. What are the additional components of M-2?
4. What is the total value of M-2 in the most recent period? ___________________
5. Explain in your own words why a decrease in the reserve requirement, say from 10% to 9%, would cause the money supply to increase.
6. Explain in your own words why a decrease in the discount rate from 3% to 2% would cause the money supply to increase.
3. A jeans manufacturer hires workers to sew jeans in its factory and derives the following daily yields of total product, or jeans output (in pairs):
Factory
Worker
(day)
Total Product
(pairs)
Marginal Product
Total Profit
Total Cost
Net
Profit
Marginal Revenue
Marginal Cost
Marginal
Profit
0
0
1
5
5
$150
$ 90
$ 60
2
15
10
300
90
210
3
20
5
150
90
60
4
23
3
90
90
0
5
24
1
30
90
- 60
6
23
-1
- 30
90
- 120
Assuming the price of jeans is $30 per pair and each worker is paid $90 per day (assume this is the ONLY cost per day) if the jeans manufacturer acts to maximize profit, how many pairs of jeans will be produced?
How many workers will be employed?
What will the jean manufacturer's profit be at this output level?
Why? (State the key condition used in your analysis and show all work in the table above.)
Now assume that each worker's wage drops to $30 per day. What is the new profit-maximizing total output?
How many workers are hired at this level?
Why?
Monetary Policy
Go to http://www.tradingeconomics.com/indicators to help find the current values.
1.What are the components of M-1?
2. What is the total value of M-1 for the most recent period? _________________
3. What are the additional components of M-2?
4. What is the total value of M-2 in the most recent period? ___________________
5. Explain in your own words why a decrease in the reserve requirement, say from 10% to 9%, would cause the money supply to increase.
6. Explain in your own words why a decrease in the discount rate from 3% to 2% would cause the money supply to increase.
3. A jeans manufacturer hires workers to sew jeans in its factory and derives the following daily yields of total product, or jeans output (in pairs):
|
Factory Worker (day) |
Total Product |
Marginal Product |
|
|
|
|
|
|
|
0 |
0 |
|||||||
|
1 |
5 |
5 |
$150 |
$ 90 |
$ 60 |
|||
|
2 |
15 |
10 |
300 |
90 |
210 |
|||
|
3 |
20 |
5 |
150 |
90 |
60 |
|||
|
4 |
23 |
3 |
90 |
90 |
0 |
|||
|
5 |
24 |
1 |
30 |
90 |
- 60 |
|||
|
6 |
23 |
-1 |
- 30 |
90 |
- 120 |
Assuming the price of jeans is $30 per pair and each worker is paid $90 per day (assume this is the ONLY cost per day) if the jeans manufacturer acts to maximize profit, how many pairs of jeans will be produced?
How many workers will be employed?
What will the jean manufacturer's profit be at this output level?
Why? (State the key condition used in your analysis and show all work in the table above.)
Now assume that each worker's wage drops to $30 per day. What is the new profit-maximizing total output?
How many workers are hired at this level?
Why?
Related textbook solutions
Related questions
The short-run production function for a manufacturer of flash memory drives is shown in the table below. Base on this information (See pages 486-487) a. Where possible, complete the missing cells in the following table:
|
Input of Labor (workers per month) |
Total Output of Flash Memory Drives |
Average Physical Product |
Marginal Physical Product |
|
0 |
0 |
0 |
- |
|
1 |
25 |
25 |
|
|
2 |
60 |
30 |
|
|
3 |
85 |
28.33 |
|
|
4 |
105 |
26.25 |
|
|
5 |
115 |
23 |
|
|
6 |
120 |
20 |
b. At what point does marginal product begin to diminish?
