Let the reserve requirement be 15 percent for deposits. Assume there are no excess reserves. If currency demand equals 40 percent of deposits and total reserves equal $60 billion, then an open market sale of $1.5 billion in government bonds should
A) increase the money supply from $560 billion to $574 billion.
B) increase the money supply from $400 billion to $410 billion.
C) reduce the money supply from $400 billion to $390 billion.
D) reduce the money supply from $160 billion to $156 billion.
E) reduce the money supply from $560 billion to $546 billion.

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The Answer of Let the reserve requirement be 15 percent for deposits. Assume there are no excess reserves. If currency demand equals 40 percent of deposits and total reserves equal $60 billion, then an open market sale of $1.5 billion in government bonds should
A) increase the money supply from $560 billion to $574 billion.
B) increase the money supply from $400 billion to $410 billion.
C) reduce the money supply from $400 billion to $390 billion.
D) reduce the money supply from $160 billion to $156 billion.
E) reduce the money supply from $560 billion to $546 billion.

Let the Reserve Requirement Be 15 Percent for Deposits