Suppose a budget line is drawn with X on the horizontal axis and Y on the vertical axis. A decrease in the price of X will cause:
a. an increase in the vertical intercept and no change in the horizontal intercept.
b. a decrease in the vertical intercept and no change in the horizontal intercept.
c. an increase in the horizontal intercept and no change in the vertical intercept.
d. a decrease in the horizontal intercept and no change in the vertical intercept.
e. a parallel, rightward shift of the budget line.
c
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The shift of the budget line from cd to ab in the figure is consistent with:
A. decreases in the prices of both M and N.
B. an increase in the price of M and a decrease in the price of N.
C. a decrease in money income.
D. an increase in money income.
Refer to the data. After a deposit of $10 billion of new currency into a checking account in the banking system, excess reserves will increase by:
Answer the question on the basis of the following consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 10 percent. All figures are in billions.
A. $0 billion.
B. $7 billion.
C. $9 billion.
D. $10 billion.