The price of a new textbook increases from $105 to $130 while the price of used copies of the textbook increases from $45 to $55. Other things equal, we would expect to observe
A. the quantity demanded of the used textbook to increase while the quantity demanded of the new textbook to fall.
B. the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.
C. the demand for the new textbook to increase while the demand for the used textbook to decrease.
D. the quantity demanded of both to fall.
Answer: B
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Suppose that the reserve ratio is 20 percent. A bank's customer deposits into her account $100,000 in funds from a check written on an account at another bank
The maximum potential increase in the money supply resulting from this transaction is equal to A) $500,000. B) $0. C) $20,000. D) $200,000.
A reduction in the required reserve ratio has the instant effect of:
a. Increasing bank shareholders' equity. b. Increasing total bank reserves c. Increasing excess reserves. d. None of the above is correct. e. Increasing the monetary base.