1 How would each of the following affect the U.s. money supply? Explain.

a. Banks decide to hold more excess reserves. (Excess reserves are reserves over and above what banks are legally required to hold against deposits.) h. People withdraw cash from their bank accounts for Christmas shopping.

c. The Federal Reserve sells gold to the public.

d. The Federal Reserve begins to pay interest on deposits of depository institutions held at the Fed (it currently doesn't pay interest).

e. The introduction of automatic teller machines, which allow people to withdraw cash from the bank as needed, makes deposits relatively more convenient. f The Federal government sells $20 billion of new government bonds to the Federal Reserve. The proceeds of the sale are used to pay government employees. g. The Federal Reserve sells some of its government securities in Tokyo for yen.