Q1. For each of the following events, answer the following:
(1) How would this event affect the money supply?
(2) What sort of defensive open market operation would the Fed undertake in response?
Mardi Gras celebrations lead people to carry more cash.
Q2. We use 2,750 per year of a certain subassembly that has a purchase cost of $450, and an annual holding cost of $500 per unit. Each order placed costs us $150. We operate 300 days per year and have found that an order must be placed with our supplier 6 working days before we can expect to receive that order. For this subassembly, find?