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Question - A bicycle store uses a continuous review system to replenish its inventory of bicycles, and it makes periodic orders of 340 bicycles, which is the optimal quantity. To what new order quantity should the store switch if the demand for its bicycles increases by 20%? Assume that the ordering cost and the carrying cost of one bicycle in the inventory remain unchanged, and round your answer to the nearest integer.
A) 408.
B) 360.
C) 372.
D) 340.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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