The transactions demand for money is most closely related to money functioning as a:

When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases.

a. true b. false

If a product has an external benefit, how does its marginal private benefit compare to its marginal social benefit?

A) Marginal private benefit is less than marginal social benefit. B) Marginal private benefit is greater than marginal social benefit. C) At low quantities, marginal private benefit is less than marginal social benefit but at high quantities, marginal private benefit is greater than marginal social benefit. D) At low quantities, marginal private benefit is greater than marginal social benefit but at high quantities, marginal private benefit is less than marginal social benefit. E) Marginal private benefit cannot be compared to marginal social benefit.