Suppose banks have $25 million in reserves,the reserve requirement is 5%,and people do not hold any cash outside of banks.If the Fed makes an open market sale of $1 million of government securities,by how much will the money supply change? (Assume that the public does not hold any of its money in the form of currency. )

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The Answer of Suppose banks have $25 million in reserves,the reserve requirement is 5%,and people do not hold any cash outside of banks.If the Fed makes an open market sale of $1 million of government securities,by how much will the money supply change? (Assume that the public does not hold any of its money in the form of currency. )

Suppose Banks Have $25 Million in Reserves,the Reserve Requirement Is