In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves
1 answer:
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Answer:
Attached grap with point A and B.
Explanation:
Russia will produce the cars as their production has te lower opportunity cost:
(Note: Opportunity cost is the amount of production resigned for the current output)
<u>Sweden pportunity cost for production car: </u>
25 ton of papper / 5 m cars = 5 tons per millon of cars
<u>Russia pportunity cost for production car: </u>
8 ton of papper / 4 m cars = 2 tons per millon of cars
With the trade set at 2 millon car for 6 tons of paper we get the following
Sweden produce 25 tons - 6 traded = 19
and receive 2 millon car
Russia produce 4 millon car - 2 traded = 2
and receive 6 tons of pappers
