Government is going to supply a subsidy

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Q1. Assume the supply of money graph. If reserve prerequisite before the shift was 10% as well as the Fed adjusted the reserve constraint to cause the shift, which of the following is a possible new value of the reserve requirement?

Q2. Now consider that government is going to supply a subsidy of $0.60/gallon in order to stimulate this bazaar. In another words, government will provide resources that allow the cost paid by customers to be 60 cents/gallon lower than the cost earned by suppliers. Calculate the new cost earned by sellers, the cost paid by clients, as well as the equilibrium quantity sold in the market.

Reference no: EM137489

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