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Suppose the Central Bank buys $100,000 of Canadian Treasury bonds from a wealthy Canadian businessman. The reserve requirement is 10 percent, the currency holdings of
Suppose the Central Bank buys $100,000 of Canadian Treasury bonds from a wealthy Canadian businessman. The reserve requirement is 10 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction. What will be the total impact on the money supply from this purchase by the central Bank? Explain.
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