Answer:
reserves increase by $100 million and the money supply increases by more than $100 million.
Step-by-step explanation:
Consider the provided information.
It is given that central bank buys $100 million worth of bonds, that means an amount of $100 million in the deposits account of the account holders.
Therefore the reserves increase by $100 million.
It is also given that there are no excess reserves, it means banks can lend the reserves and that will increase the money supply by more than $100 million.
Hence, reserves increase by $100 million and the money supply increases by more than $100 million.
