The reserve ratio is 10 percent and all loan proceeds are ...

[naturalchemist]

The reserve ratio is 10 percent and all loan proceeds are deposited in transactions accounts. A bond dealer has 100 million in deposits, 8 million in vault cash, and 7 million in deposits at the Fed.
 
  The Fed sells 1 million in securities to the bond dealer. As a result, of this transaction alone
  A) the money supply falls by 1 million and total reserves rise by 1 million.
  B) the money supply falls by 1 million and total reserves fall by 1 million.
  C) the money supply rises by 1 million, total reserves fall by 900,000.
  D) the money supply rises by 1 million, but reserves do not change.

Question 2

The figure above shows the market for iPods. Which of the following shifts the demand curve from D0 to D1?
 
  A) a requirement that all students at universities have an iPod
  B) a decrease in the price of Zunes, a substitute for iPods
  C) a decrease in the price of iPods
  D) an increase in the price of iPods
  E) an increase in people's incomes

[ynlevi]

Answer to Question 1

B

Answer to Question 2

B

[naturalchemist]

TYSM

[yeungji]

Thanks for the timely response, appreciate it