Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
7. Suppose the reserve ratio is 10 percent, banks are all loaned up, and people hold only deposits and no currency. When the Fed sells $20 million worth of bonds to the public, bank reserves
A. increase by $20 million and the money supply eventually increases by $20 million. B. increase by $20 million and the money supply eventually increases by $200 million. C. decrease by $2 million and the money supply eventually increases by $20 million. D. decrease by $20 million and the money supply eventually decreases by $200 million. E. None of the above
Answer: D
Can someone explain the answer or show me the math and formulas to this?
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