If the Fed purchases $200 of bonds from an open market operation. People & companies divide their monetary assesses as C =10% and D =90%

a) Transaction (Trans) 1. If the Fed purchases $200 of bonds from an open market operation, it means money supply immediately will (increase or decrease) by $200 or be unchanged.

b) Trans 2. If the recipient of $200 newly-injected money from the Fed, and he/she keeps $In cash (C) and deposits $ in to a checking account (D). The transaction change money supply by how much or not? and why?

c) Trans 3. The bank makes loans base on a reserve-deposit ratio=5%. After obtaini the deposit from the above person, $_______ loan were made by the bank. This transaction change money supply and by how much or not? and why?

d) Trans 4. Peter who received the loans walks out the bank spends the money to purchase items. The transaction of purchase change money supply by how much c not? and why?

e) In total, please how much money supply will change potentially for the entire economy ? (Hint / M = [(C / D) + 1] / [(C / D) + (R / D)] * B)

f) If banks would like to hold more reserves during a crisis, how does it affect the money multiplier and money supply?

7) Thus, the money supply is affected by the behavior of which of the following agents: the FDIC, depositors, the Fed, banks, government?