The Federal Reserve buys $2000 in bonds from Jill who deposits the funds in Jack's Bank....
The Federal Reserve buys $2000 in bonds from Jill who deposits the funds in Jack's Bank. Jack's Bank then lends Jacquita $500. After all of these transaction are complete, the money supply has risen by $_____ .
Homework Answers
Federal Reserve buys $2000 bonds from Jill. This leads to an increase in the money supply by $2000 caused by Federal Reserve.
Now, Jack Deposits it in his bank which lends Jacquita $500. This leads to another Increase in money supply by $500 caused by Jack's bank
After all the transactions are complete, the total Increase money supply= Increase in Money Supply Caused by Federal Reserve+ Increase in Money Supply Caused by Jack's bank= $2000+$500= $2500
After all the transactions are complete, the money has risen by $2500.
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The Federal Reserve buys $2000 in bonds from Jill who deposits
the funds in Jack's Bank....
The Federal Reserve buys $2000 in bonds from Jill who deposits the funds in Jack's Bank....
The Federal Reserve buys $2000 in bonds from Jill who deposits the funds in Jack's Bank. Jack's Bank then lends Jacquita $500. After all of these transaction are complete, the Reserves in Jack's Bank have risen by $_____ .
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