Suppose the required reserve ratio is 10 percent,and banks hold no excess reserves.If the Fed purchases $10 million worth of government bonds from Bank INF,the amount of loans held by Bank INF will

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When the Fed purchases $10 million worth of government bonds from Bank INF, the bank's reserves increase by $10 million. With a 10% reserve ratio, the bank can lend out the remaining 90%, which is $9 million. However, the question asks about the immediate change in loans held by Bank INF, which increases by the full $10 million initially, as the bank's reserves increase by that amount.

Suppose the Required Reserve Ratio Is 10 Percent,and Banks Hold