Refer to Figure 5.1. In which graph does a shift from BL1 to BL2 represent an increase in the consumer's income?

When the Fed purchases federal government bonds in the open market

A) the demand for money expands. B) there is no change in the money supply. C) the money supply expands. D) the money supply contracts.

Say the required reserve ratio is 20 percent. If you pay back a loan of $10,000 a bank had previously made to you, the act of paying back the loan: a. adds $2,000 in bank reserves

b. adds $10,000 in bank reserves. c. eliminates $2,000 in bank reserves. d. eliminates $10,000 in bank reserves.