Business, 01.02.2021 17:00, mari530

The central bank buys $15,000 worth of bonds in the open market from Christopher, who deposits the proceeds in his checking account at Carla Bank. The required reserve ratio is

5%.

(a) What is the amount by which Carla Bank's liabilities have changed?

(b) Calculate the change in required reserves for Carla Bank.

(c) What is the dollar value of the maximum amount of new loans Carla Bank can initially

make because of Christopher's deposit?

(d) Based on the central bank's open-market purchase of bonds, calculate the maximum

amount by which the money supply can change throughout the banking system.

(e) How will the change in the money supply in part (d) affect aggregate demand in the short

run? Explain.

Answers: 3

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The central bank buys $15,000 worth of bonds in the open market from Christopher, who deposits the...