How would the following influence the growth rates of the M1 and M2 money supply figures over time?

a. an increase in the quantity of U.S. currency held overseas

b. a shift of funds from interest-earning checking deposits to money market mutual funds

c. a reduction in the holdings of currency by the general public because debit cards have become more popular and widely accepted

d. the shift of funds from money market mutual funds into stock and bond mutual funds because the fees to invest in the latter have declined

*16. Suppose that the Federal Reserve purchases a bond for $100,000 from Donald Truck, who deposits the proceeds in the Manufacturer’s National Bank.

a. What will be the impact of this transaction on the supply of money?

b. If the reserve requirement ratio is 20 percent, what is the maximum amount of additional loans that the Manufacturer’s Bank will be able to extend as the result of Truck’s deposit?

c. Given the 20 percent reserve requirement, what is the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system because of the Fed’s action?

d. Would you expect this to happen? Why or why not? Explain.