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Aggregate Demand line

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1.Suppose a bank has $200,000 in deposits, a required reserve ratio of 10 percent, and bank reserves of $50,000. Then the bank can make new loans in the amount of?

1a. If the required reserve is decreased, how do you show that on a graph (investment demand)?

1b. If the required reserve is decreased, what happens to the equilibrium price level and output rate (assuming AS is sloping upward)_

2. What is included in determining any of the measures of money supply?

3. If spending increase is 80% and it increases by $40 billion, how does that change GDP?

4. Do import taxes, income taxes or govt expenditures have an effect on AD?

5. If the Fed is stimulating the economy, how does that affect (plus or minus) interest rates, money supply, and-or investment..and does the AD or AS shift right or left?

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Aggregate demand line is assessed in the solution.

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