1.Consider the Federal Reserve bought $2,000 worth of bonds from Jim and he deposited it all in his checking account.Assume the reserve ratio is 10%, but Jim's bank decides to hold on to extra reserves worth $200.

a.

T-account (correctly labeled) that would identify the condition described above.

Do not need to explain:

b.According to the current conditions, what is the dollar amount this bank can increase its loans by.

c.How much of the current money supply is attributed to Fed actions?