Author Question: The Fed sells a U.S. government security and a bank dealer writes a check for the amount. When the ... (Read 43 times)

burchfield96 · **on:** Jun 30, 2018

The Fed sells a U.S. government security and a bank dealer writes a check for the amount. When the check clears

A) reserves remain unchanged because the decrease of reserves at the dealer's bank is offset by an increase in the reserves at the Fed.
B) reserves have fallen by the amount of the reserves times the reserve ratio, and the money supply falls by the difference between the amount of the check and the fall in the reserves.
C) reserves have fallen by the amount of the check because the Fed clears the check by reducing the bank's deposits at the Fed.
D) reserves increase by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed.

Question 2

The figure above shows the market for iPods. Which of the following creates a movement from point A to point B?

A) a decrease in the price of Zunes, a substitute for iPods
B) a requirement that all students at universities have an iPod
C) a decrease in the price of iPods
D) an increase in the price of iPods
E) an increase in people's incomes