Henry Deposits $2,000 in Currency in the First Street Bank

question 217

Multiple Choice

Henry deposits $2,000 in currency in the First Street Bank. Later that same day, Jane Harris negotiates a loan for $5,400 at the same bank. After these transactions, the supply of money has

• A) increased by $2,100.
• B) increased by $3,300.
• C) increased by $5,400.
• D) decreased by $3,300.

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Definitions:

Income Elasticity

A measure of how much the demand for a good will change in response to a change in consumer's income.

Cross Elasticity

An indicator of the sensitivity in demand for a certain product in response to price fluctuations of a different product.

Percentage Change

A mathematical calculation that shows how much a number has increased or decreased compared to its previous value, expressed as a percentage.

Complementary Goods

Goods and services that are used together; when the price of one falls, the demand for the other rises (and conversely).