The following graph shows the market for bank reserves in a hypothetical economy. Suppose the price level decreases from 110 to 70. Shift the appropriate curve on the following graph to show the impact of a decrease in the overall price level. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drags it a little farther.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The price level and the market for bank reserves

The following graph shows the market for bank reserves in a hypothetical economy. Suppose the price level decreases from 110 to 70.
Shift the appropriate curve on the following graph to show the impact of a decrease in the overall price level.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drags it a little farther.
 
 
 
Analyze the effects of this change in the price level, then fill in the following table with these results.
 
Effect
Quantity of bank reserves supplied  _________   (increase/ decreases/remains the same )
Quantity of real GDP demanded ___________    (increases/decreases/remain the same )
NOTE- THIS QUESTION IS A ONE QUESTION BUT IT IS DIVIDED INTO SUBPARTS . PLEASE ANSWER ALL QUESTUIONS WITH EXPLANATION.
 
INTEREST RATE (Percent)
6
5
3
2
1
0
Supply
Demand
0
10
20
30
40
50
60
QUANTITY OF BANK RESERVES (Billions of dollars)
ģ
Demand
Supply
201
Transcribed Image Text:INTEREST RATE (Percent) 6 5 3 2 1 0 Supply Demand 0 10 20 30 40 50 60 QUANTITY OF BANK RESERVES (Billions of dollars) ģ Demand Supply 201
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