Question

What is the change in the money supply when the fed purchases $600 worth of bonds and the required reserve ratio is 8 percent assuming banks hold no excess reserves?

Answer 1

26.4 percent  the change in the money supply when the fed purchases $600 worth of bonds and the required reserve ratio is 8 percent assuming banks hold no excess reserves

What is money supply?

The total amount of money and other liquid assets in an economy on the measurement date is known as the money supply. Both cash and deposits that can be accessed virtually as easily as cash are roughly included in the money supply.

Through a mix of their central banks and treasuries, governments issue coin and paper money. By imposing reserve holding requirements on banks, dictating how to grant credit, and handling other monetary issues, bank regulators have an impact on the amount of money that is available to the general people.

The quantity of money or cash in circulation within an economy is referred to as the money supply.

Numerous measurements of the money supply also factor in non-cash assets like credit and loans.

Monetarists contend that, all other things being equal, expanding the money supply results in inflation.

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