For the following two questions, assume no currency is held outside the banking system and banks desire to hold no excess reserves. The required reserve ratio is 10 percent. 1.A. Use the balance sheet below to show the immediate (before the bank has time to make loans, etc.) effects of the Fed buying $200 worth of securities from this bank. 10,000 What is the immediate effect on the money supply? Reserves Req. 1,000 DD Exc. Loans 9,000 Debt 1,000 Securities 5,000 Capital 4,000 B. Use the balance sheet below to show the effects after the bank has time to adjust its loan portfolio and level of deposits. Reserves DD Determine the growth in the money supply associated with this open market purchase. Req. Exc. Loans Securities Debt Capital