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Suppose the Fed buys T-bills.

As a result of this policy, what will happen to the money supply?

 

Hint


Suppose the Fed sells T-bills.

As a result of this policy, what will happen to the money supply?

 

Hint


Consider the following balance sheet for US Bank.

AssetsLiabilities
Reserves806Deposits2600
Loans1794

Suppose that someone deposited $400 at US Bank.

Given this data, what is the maximum amount by which the money supply will increase?

Hint