The logic of the wealth effect begins with a change in the price level changing the interest rate.

Based in part on the budget surplus, in 2001 President Bush and Congress passed a permanent tax cut

Indicate whether the statement is true or false

The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market sale of government securities that changes the quantity of reserves by $25 billion, then the federal funds rate will

A) remain at 4 percent a year. B) rise to 6 percent a year. C) fall to 4 percent a year. D) change, but more information is needed to determine by how much. E) None of the above answers is correct.