Suppose that the FRS buys $50 9.

million in bonds on the open market. Trace the impact of this action on the banking system, the money supply, and the amount of loans in the economy. What will be the total impact of this action on the money supply? What factors could make the total impact less than the total suggested by the deposit expansion formula?

Bus tokens are an example of a near-money. Bus tokens are sometimes sold at a discount when large quantities are purchased. Use the concept of the

"float" to explain why these discount sales make sense.