When the real interest rate increases, banks have an incentive to lend a greater portion of their deposits, which reduces the reserve–deposit ratio. in particular, suppose that res = 0.4 − 2r, where res is the reserve-deposit ratio and r is the real interest rate. the currency-deposit ratio is 0.4, the price level is fixed at 1.0, and the monetary base is 60. the real quantity of money demanded is

Martha is one producer in the perfectly competitive jelly industry. last year, martha and all of her competitors found themselves earning economic profits. if there is free entry and exit, what do you expect to happen to the number of suppliers in the industry and the price of jelly? the number of suppliers will increase, and the price of jelly will fall. the number of suppliers will decrease, and the price of jelly will increase. the number of suppliers will increase, and the price of jelly will increase. the number of suppliers will decrease, and the price of jelly will fall.