If Md = 2,600 – 200r, the MPC = .75, G=100, and T = 100 . If the central bank wants the interest rate to be r=2, then the money supply must be

If the Federal Reserve System buys government securities from commercial banks and the public:

A. commercial bank reserves will decline. B. commercial bank reserves will be unaffected. C. it will be easier to obtain loans at commercial banks. D. the money supply will contract.

Which of the following factors would indicate a less elastic demand?

A. The good represents a large fraction of the budget. B. Demand is measured over a longer period of time. C. There are few substitutes. D. The price of the good is high.