A(n) ________ occurs when an authorized federal employee signs a document that legally binds the government to a future expendit
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Answer:
The money supply decreases by $25.5 million and money supply decreases by $170 million.
Explanation:
The reserve ratio is 15%.
The reserve sells bonds worth $25.5 million to the public.
This will cause a reduction of $25.5 million reserves as banks will need to pay Fed for the bonds.
The money supply will change by
=
=
=
= - $170 milion
So, the money supply will decrease by $170 million.