If the required reserve ratio is 5 percent and the Federal Reserve sells $10,000 worth of bonds,the money supply can potentially

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When the Federal Reserve sells $10,000 worth of bonds, it reduces the reserves in the banking system. With a reserve ratio of 5%, the money multiplier is 1/0.05 = 20. Therefore, the potential decrease in the money supply is $10,000 * 20 = $200,000.

If the Required Reserve Ratio Is 5 Percent and the Federal