In Macroland, currency held by the public is 3,000 econs, bank reserves are 300 econs, and the
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Question:
In Macroland, currency held by the public is 3,000 econs, bank reserves are 300 econs, and the desired reserve/ deposit ratio is 10%. If the Central Bank prints an additional 400 econs and uses this new currency to buy government bonds from the public, the money supply in Macroland will increase from______ econs to _____ econs, assuming that the public does not wish to change the amount of currency it holds.
a. 6,000; 4,000
b. 3,000; 7,000
c. 6,000; 10,000
d. 30,000; 34,000
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