The demand for reserves is __________ related to the federal funds rate because banks __________ their excess reserves as the federal funds rate falls

Refer to the above diagram in which the downsloping linear lines are budget lines and I1, I 2, and I3 comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that:

A) point 2 yields more utility than either 1 or 5. B) points 1 and 5 yield more utility than point 2. C) points 1, 2, and 5 yield equal amounts of utility. D) the levels of utility associated with these three points cannot be compared.

Describe the effects of contractionary fiscal policy by the domestic government on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model

What will be an ideal response?