Author Question: How does the equilibrium quantity traded change when there is an increase in supply and a decrease ... (Read 113 times)

strangeaffliction · **on:** Jun 30, 2018

How does the equilibrium quantity traded change when there is an increase in supply and a decrease in demand?

Question 2

U.S. government bonds held by commercial banks are:
a. government assets and commercial bank assets.
b. government assets and commercial bank liabilities.
c. government liabilities and commercial bank assets.
d. government liabilities and commercial bank liabilities.

234sdffa · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The impact on equilibrium quantity is indeterminate because the increase in supply increases the equilibrium quantity and the decrease in demand decreases it. The change in the equilibrium quantity will vary depending on the relative changes in supply and demand. If the decrease in demand is greater than the increase in supply, the equilibrium quantity will decrease. If the increase in supply is greater than the decrease in demand, the equilibrium quantity will increase.

Answer to Question 2

c