The market supply curve is found by
A) horizontally summing all individual supply curves.
B) vertically summing all individual supply curves.
C) Either A or B above since they both give the same answer.
D) None of the above.
A
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Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%. This action would
A) increase money demand, shifting the LM curve up and to the left. B) increase money demand, shifting the LM curve down and to the right. C) decrease money demand, shifting the LM curve up and to the left. D) decrease money demand, shifting the LM curve down and to the right.
If the Federal Reserve simultaneously sells government bonds in the open market and raises reserve requirements, the
a. money supply will increase. b. money supply will decrease. c. money supply will stay the same. d. two tools will work against one another and the net effect on the money supply is uncertain.