9. What happens to the money supply if the deficit is financed by selling bonds to the general public?

a) the money supply increases b) the money supply decreases

c) the money supply is unaffected

d) we cannot tell what will happen to the money supply

10. What happens to the money supply if the deficit is financed by selling bonds to the central bank?

a) the money supply increases b) the money supply decreases

c) the money supply is unaffected

d) we cannot tell what will happen to the money supply 46

11. "The Fed can "pay" for its bond purchases simply by crediting the amount of its purchases to the account of the bank involved in the transaction. As a result, ........" Complete this clipping.

a) bank reserves ultimately increase by this amount times the money multiplier

b) bank reserves ultimately decrease by this amount times the money multiplier

c) the money supply ultimately increases by this amount times the money multiplier

d) the money supply ultimately decreases by this amount times the money multiplier