Question
If a bond dealer sells a government bond to the Fed for?$100,000, and the reserve ratio is 10? percent, then the bank thatreceives a? $100,000
If a bond dealer sells a government bond to the Fed for?$100,000, and the reserve ratio is 10? percent, then the bank thatreceives a? $100,000 deposit from the dealer can expand its loansby? ________, and the money supply can increase by as much as?________.
A. ?$90,000; $900,000
B. ?$80,000; $800,000
C. ?$10,000; $100,000
D. ?$90,000; $1,000,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Economics of Money, Banking and Financial Markets
Authors: Frederic S. Mishkin
9th Edition
978-0321607751, 9780321599797, 321607759, 0321599799, 978-0321598905
