Suppose that the Fed conducts a $160 million open market purchase of government bonds. In addition, suppose that the required reserve ratio is 43 percent and that banks do not hold any excess reserves. What is the effect on the money supply? More precisely, by how much will the money supply increase? Hint Suppose that the Fed sell $470 million of government bonds. In addition, suppose that the required reserve ratio (R) is 11 percent and that banks do not hold any excess reserves. What is money multiplier? Hint Suppose that the Fed sells $440 million of government bonds. In addition, suppose that the required reserve ratio is 10 percent and that banks do not hold any excess reserves. What is the effect on the money supply? More precisely, by how much will the money supply change? Hint