5) The Fed makes an open market sale of $500 in bonds to a bank for reserves. The reserve requirement is 10%. Show the changes on the balances sheets of the Fed and the bank. What is the change in the monetary base? What is the change in the money supply? You can use the simple formula for the money multiplier.

Answer rating: 100% (QA)

When the Federal Reserve Fed makes an open market sale of 500 in bonds to a bank for reserves it aff... View the full answer