Which of the following is likely to have the narrowest bid-asked spread?

Suppose that the economy is in long-run equilibrium and the government decided to engage in unexpected contractionary policy by decreasing the money supply

If we assume rational expectations, which of the following statements is correct about the effect of contractionary policy in the long run? A) The unemployment rate will decrease, real GDP will decrease and the price level will decrease. B) The unemployment rate will increase, real GDP will increase and the price level will increase. C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease. D) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase.

Assume that the required reserve ratio is 20%. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the reserves at Bank A and Bank B?

A. increase by $10,000 at Bank A and decrease by $50,000 at Bank B B. increase by $50,000 at Bank A and decrease by $50,000 at Bank B C. Reserves stay the same in both banks. D. increase by $10,000 at Bank A and decrease by $10,000 at Bank B