All else equal, as the price of a product falls, the quantity supplied decreases

Which of the following statements is most correct?

A. The Fed can control the size of the monetary base but not the price of its components. B. The Fed can control either the size of the monetary base or the price of its components. C. The Fed can control the amount of reserves, but cannot control the monetary base. D. The Fed can control the make up of the monetary base, but cannot affect the market interest rate.

Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. Initially buyers believe that 80% of used cars in the market are lemons (low quality). Compared to the outcome with these initial expectations, how many fewer cars are sold in equilibrium?

A. 50 B. 80 C. 110 D. The number of cars sold in equilibrium is the same as the outcome with neutral expectations.