Which of the Following Will NOT Happen When the Federal

question 241

Multiple Choice

Which of the following will NOT happen when the Federal Reserve buys bonds from the public in the open market and cash in the hands of the public does not change?

• A)The required reserve ratio will increase.
• B)The money supply will increase.
• C)The deposits of commercial banks will increase.
• D)Commercial bank reserves will increase.

Understand the concept of marginal social benefit (MSB) and how it is calculated for different members in a society.

Recognize the characteristics and implications of nonexcludable goods, including the free-rider problem.

Determine the socially optimal level of provision for public goods and common resources.

Identify and differentiate between types of goods based on their excludability and rivalry in consumption.

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Definitions:

Consumer Surplus I

The gap between what consumers are prepared and able to spend on a product or service and what they end up paying.

Price

The amount of money required to purchase a good or service.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.

Absolute Advantage

Refers to the capability of an entity to produce a good or service more efficiently than its competitors using the same amount of resources.