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.
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.
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter6: Saving And Investing
Section: Chapter Questions
Problem 14AA
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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 ) |
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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