A central bank ________ of domestic currency and corresponding ________ of foreign assets in the foreign exchange market leads to an equal decline in its international reserves and the monetary base, everything else held constant

When the Fed _______ governments bonds it _______ bank reserves.

A) sells; increases B) buys; increases C) buys; decreases D) issues new; increases

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused

A) scarcity because there are less oranges now than people want. B) scarcity because people have to switch to other types of citrus fruits. C) a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. D) a shortage because the orange growers will have less income.