Tutor profile: Gerard Q.

How much money can I contribute to an IRA or Roth IRA in 2019?

In 2019 the annual contribution limit for IRA and Roth IRA accounts is $6,000 (or $7,000 if you are over the age of 50). This is the total amount across all IRA or Roth IRA accounts that you may own. In addition to the contribution limit there are other limits to consider when deciding where to place your retirement savings. IRA contributions can be deductible or nondeductible depending on your income, participation in employer sponsored retirement accounts, and marital status. Roth IRAs have limitations based on income and marital status as well.

What is the purpose of open market operations by the Federal Reserve?

Open market operations is a tool that the Fed uses to control the money supply in the economy through the buying or selling of government securities. There are two primarily objectives for open market operations. The Fed either wants to stimulate the economy by adding money to the banking system or contract the economy by taking money out of the system. The reason to use this tool is to control inflation and promote price stability.

Why does profit maximization occur when Marginal Revenue is Equal to Marginal Cost? MR=MC

The reason profit maximization occurs at this point is because it creates the largest margin between total revenue and total cost. For example, if marginal cost was less than marginal revenue, a firm would be inclined to produce additional units because each unit would add more revenue than it would cost. Alternatively, if marginal cost was more than marginal revenue a firm would be inclined to produce less units because each unit produces more cost than revenue. Therefore we end up at profit maximization when MR=MC.