Which of the Following Are Policy Tools Used by the Federal

question 274

Multiple Choice

Which of the following are policy tools used by the Federal Reserve?
I.the federal personal income tax
Ii.open market operations
Iii.changing the required reserve ratio

• A)i only
• B)ii only
• C)iii only
• D)ii and iii
• E)i,ii,and iii

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Definitions:

Constant Returns To Scale

a situation in production where increasing all inputs by the same percentage results in output increasing by that same percentage.

Long-run Profits

The potential earnings of a business over a period long enough for all inputs to be adjusted, considering the firm's ability to enter or exit markets.

Factor Price

The price at which factors of production (land, labor, capital) are bought and sold.

Production Function

A mathematical model that describes the relationship between inputs used in production and the resulting output.