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Please help me on these two problems. Thank you. 5. Assume that customers deposit $4,000 into Otis Bank. a. What is the initial change in

Please help me on these two problems.

Thank you.

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5. Assume that customers deposit $4,000 into Otis Bank. a. What is the initial change in M1 money supply? Explain your answer. b. If the reserve requirement is 10%, what would be the maximum change in the money supply? Explain your answer. 6. Answer the following questions about monetary policy: 3. Explain why $100 deposited in the bank and $ 100 of bonds purchased by the central bank don't have the same effect on the total money supply. In your answer, identify which of the two has the greater effect and fully explain why. b. Assume that the Fed has purchased bonds from banks totaling $20 billion. If the required reserve ratio is 0.25, calculate the maximum change in loans throughout the banking system. (Hint: this is a not the same question and answer as asking for the maximum change to the money supply.)

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