If the Fed buys $10 million dollars in government securities, and the required reserve ratio is 20 percent, the banking system is able to expand the money supply by:

If demand price elasticity measures 2, this implies that consumers would

a. buy twice as much of the product if the price drops 10 percent. b. require a 2 percent drop in price to increase their purchases by 1 percent. c. buy 2 percent more of the product in response to a 1 percent drop in price. d. require at least a $2 increase in price before showing any response to the price increase. e. buy twice as much of the product if the price drops 1 percent.

A central bank's setting (or altering) of the money supply is known as

a. open-market operation. b. interest rate policy. c. monetary policy. d. employment policy.