All of the Following Were Reasons That the Fed Increase

question 47

Multiple Choice

All of the following were reasons that the Fed increase the required reserve ration in 1936 EXCEPT:

• A)concerns over the possibility of future inflation
• B)to eliminate the high level of excess reserves
• C)fears that the economy was overheating
• D)concerns over a speculative bubble

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Definitions:

Marginal Physical Product

The marginal physical product is the change in output resulting from employing one more unit of a particular input, holding other inputs constant.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with cheaper alternatives.

Margin

Margin refers to the difference between the selling price of a good or service and its cost of production, also used to describe profit margin or markup.

Total Revenue Product

The total revenue generated by a factor of production, calculated by multiplying the marginal product of the factor by the market price of the output.