If households and firms decide to hold less of their money in checking account deposits and more in currency, then initially, the money supply

Refer to Figure 4-18. As a result of the tax, is there a loss in producer surplus?

A) No, because the consumer pays the tax. B) Yes, because producers are not selling as many units now. C) No, because the market reaches a new equilibrium D) No, because producers are able to raise the price to cover their tax burden.

An increase in domestic output would cause a ________ in net exports and a ________ in the exchange rate

A) rise; rise B) rise; fall C) fall; rise D) fall; fall