Assume that these are the most recent U.S. data on key monetary variables (T stands for trillions of dollars):

a. Calculate the money multiplier. (Round your answer to two decimal places.)

b. Now, assume the Fed buys $35 Billion worth of T-Bonds. Will the money supply increase or decrease? Explain

Assuming no change in E (the percentage of deposits that banks want to hold as excess reserves), and no change in cash held by the public, what will be the final U.S.money supply after the Feds action? Show all of your calculations.

Cash held by the public	$4T
Checking deposits	$7T
R	8%
E	6%