Q1. Sprint, prior to spinning the businesses off to concentrate on cellular phone service, provided both local and long distance landline service. A study noted that they charged a price for local telephone services that was roughly one-half of its cost of providing the services. In contrast, it charged almost two times its costs for long distance services. What was the managerial economic rationale for this pricing?

Q2. Assume that the currency-deposit ratio is 32%, the required reserve ratio is 7%, the excess reserve ratio is 1%, and total money supply is $1,320 billion. What is the amount of high powered money?