The Fed buys 100 million U.S. government securities from Bank of America. Bank of America's balance sheet shows this transaction as ________ in total assets and ________ in reserves.
A) no change; a 100 million decrease
B) no change; a 100 million increase
C) a 100 million increase; no change
D) a 100 million increase; a 100 million increase
E) a 100 million decrease; a 100 million decrease
Question 2
In the figure above, if the firm is regulated using an average cost pricing rule, the consumer surplus created is equal to the area of
A) ABG.
B) BEFG.
C) BCFG.
D) BCE.
E) None of the above because there is no consumer surplus created.
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