Assume the Fed sells a $5m T-bill to Main Street Bank.

a. Show the T-account Main Street Bank.

b. By how much will the monetary base change?

c. If the reserve-deposit ratio is 0.3 and the currency-deposit ratio is 0.2, calculate the eventual change in the money supply.

Suppose, as before, that the reserve-deposit ratio is 0.3% and the currency-deposit ratio is 0.2. If the Federal Reserve wants to increase the money supply by $1m, what amount of T-bills would it have to buy?