Answer the Question Based on the Information in the Table

question 310

Multiple Choice

$$\begin{array} { | c | c | c | c | } \hline \text { Money Supply } & \text { Money Demand } & \text { Interest Rate } & \begin{array} { c } \text { Investment (at Interest } \\\text { Rate Shown) }\end{array} \\\hline \$ 400 & \$ 600 & 2 \% & \$ 700 \\\hline \$ 400 & 500 & 3 & 600 \\\hline \$ 400 & 400 & 4 & 500 \\\hline \$ 400 & 300 & 5 & 300 \\\hline \$ 400 & 200 & 6 & 200 \\\hline\end{array}$$
Answer the question based on the information in the table. Suppose the legal reserve requirement is 10 percent and initially there are no excess reserves in the banking system. If the Fed wished to reduce the interest rate by 1 percentage point, it would

• A) sell $10 of government bonds in the open market.
• B) buy $100 of government bonds in the open market.
• C) sell $100 of government bonds in the open market.
• D) buy $10 of government bonds in the open market.

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Definitions:

Total Revenue

The aggregate income a company garners from its sales of goods or provision of services over a designated period.

Quantity Demanded

The specific amount of a good or service consumers are willing to buy at a given price, holding all other factors constant.

Price

The expected, necessary, or contributed financial amount in exchange for something.

Total Revenue

The complete amount of income generated by the sale of goods or services related to the company's primary operations.