Answer the following questions: a) If a bank depositor deposits $1,000 of currency to his checking...

  

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Answer the following questions: a) If a bank depositor deposits $1,000 of currency to his checking account, what happens to reserves, checkable deposits, and the monetary base? b) If the Fed buys bonds worth $2 million from the First National Bank, what happens to reserves and the monetary base? Use T-accounts to explain your answer. c) If the Fed sells $2 million of bonds to Irving the Investor, who pays for the bonds with a check, what happens to reserves and the monetary base? Use T- accounts to explain your answer. d) The Fed sells $100 million of bonds from the public and also increases the required reserve ratio. What will happen to the money supply? Answer the following questions: a) If a bank depositor deposits $1,000 of currency to his checking account, what happens to reserves, checkable deposits, and the monetary base? b) If the Fed buys bonds worth $2 million from the First National Bank, what happens to reserves and the monetary base? Use T-accounts to explain your answer. c) If the Fed sells $2 million of bonds to Irving the Investor, who pays for the bonds with a check, what happens to reserves and the monetary base? Use T- accounts to explain your answer. d) The Fed sells $100 million of bonds from the public and also increases the required reserve ratio. What will happen to the money supply?

Answer rating: 100% (QA)

a When a bank depositor deposits 1000 of currency into their checking account the following changes occur Reserves The banks reserves increase by 1000 This is because the currency deposited by the dep... View the full answer