The Graph Shown Portrays a Subsidy to Buyers

question 37

Multiple Choice

The graph shown portrays a subsidy to buyers. Before the subsidy was put in place, sellers sold _______ units and received _______ for each one.

• A)100; $46
• B)100; $30
• C)150; $40
• D)150; $24

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Definitions:

Required Reserve Ratio

is the fraction of deposits that banks are required to keep on hand as reserves, rather than loaning them out.

Money Supply

The total amount of money available in an economy, including cash, coins, and balances held in checking and savings accounts.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy, banking supervision, and financial services.

Money Expansion

An increase in the total supply of money in circulation within an economy, typically achieved through central bank operations.