Page1of 4C13. Suppose I sell $1,000 of bonds to the Fed, and they credit my 1st National Bank (depositsincrease). 1st National Bank makes loans to Steve, and Steve deposits all the loans in hisbank account at 2nd National Bank. 2nd National Bank makes loans to Sarah, and Sarahdeposits all the loans in her bank account at 3rd National Bank. The reserve ratio is 10%.What is the increase in money supply in this economy? Write answers in the box.ZOOM+4

In the economy, there is a sale of bonds worth $1000 to the Fed. This means the Fed bought the bonds…

Answered: the Fed, and th es loans to Stev k. 2nd…

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the Fed, and th es loans to Stev k. 2nd National account at 3rd M oply in this econ

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 31P: Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money,...

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Question

Page
1
of 4
C
1
3. Suppose I sell $1,000 of bonds to the Fed, and they credit my 1st National Bank (deposits
increase). 1st National Bank makes loans to Steve, and Steve deposits all the loans in his
bank account at 2nd National Bank. 2nd National Bank makes loans to Sarah, and Sarah
deposits all the loans in her bank account at 3rd National Bank. The reserve ratio is 10%.
What is the increase in money supply in this economy? Write answers in the box.
ZOOM
+
4

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