During a period of inflation, the Fed is likely to: a. sell government securities to banks in order to reduce the amount of loanable funds. b. buy government securities from banks in order to reduce the amount of loanable funds. c. cut the discount rate to increase the affordability of loanable funds. d. cut the required reserve ratio in order to reduce the amount of excess reserves banks have to loan out.

Suppose the production function in an economy is y = k0.5l0.5, where k is the amount of capital and l is the amount of labor. the economy begins with 64 units of capital and 16 units of labor. use a calculator and equations in the chapter to find a numerical answer to each of the following questions. what are the wage and the rental price of capital? the wage is equal to unit(s) of output and the rental price of capital is equal to unit(s) of output.