Assume the required reserve ratio (RRR) is 10 percent.If the Fed purchases a $5,000 bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account,what has happened to the money supply?
A) It has decreased by $5,000.
B) It has increased by $5,000.
C) It has decreased by $4,500.
D) It has increased by $4,500.
E) There has been no change in the money supply.
Correct Answer:
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