The above figure shows supply and demand curves for milk. In an effort to help farmers, the government passes a law that establishes a $3 per gallon price support. To maintain the price support, government expenditures must equal

Suppose Kaylee withdraws $4,000 from her bank. If the reserve ratio is 25 percent, then this will lead to a decrease in M1 of

A) $1,000. B) $4,000. C) $8,000. D) $12,000.

The government decides to reduce its expenditure by $250. The multiplier in this economy is 4 and the tax rate is 22 percent. The net effect of this contractionary fiscal policy is to:

A. decrease the budget deficit by $30. B. increase the budget deficit by $30. C. decrease the budget deficit by $220. D. increase the budget deficit by $220.