Investment (I) in the United States may increase with either an increase in national saving or an increase in net foreign investment

The above figure shows the U.S. market for 1 carat diamonds. With free trade, Americans buy ________ diamonds and pay a price of ________ per diamond

A) 300,000; $4,000 B) 500,000; $4,000 C) 700,000; $3,000 D) 300,000; $3,000 E) 900,000; $2,000

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

a. it increases by $250,000 b. it increases by $200,000 c. it decreases by $200,000 d. it decreases by $250,000