Suppose the Federal Reserve Banks buy $8 in securities from the public. As a result of this transaction (Assume the required reserve ratio is 25 percent)

	a.	the supply of money will directly decrease by $8 and the money-creating potential of the commercial banking system will be unaffected.
	b.	the supply of money will directly increase by $8 and the money-creating potential of the commercial banking system will increase by $24.
	c.	the supply of money will be unaffected but the money-creating potential of the commercial banking system will increase by $24.
	d.	the supply of money will directly increase by $2 and the money-creating potential of the commercial banking system will increase by $6.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below analyze this stepbystep The Federal Res... View the full answer