If the FOMC purchases government bonds priced at $5, 000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:

Name: If the FOMC purchases government bonds priced at $5, 000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:
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The reserve requirement is 20%, so the required reserves increase by 20% of $5,000, which is $1,000.

If the FOMC Purchases Government Bonds Priced at $5, 000