Final answer:
A bank with a 15% reserve ratio must hold $150,000 in reserves from a $1 million deposit, enabling it to lend out $850,000. This lending can increase the overall money supply.
Step-by-step explanation:
When the Federal Reserve buys bonds, it introduces new money into the banking system. In this scenario, the bond dealer deposits $1 million into a bank account.
With a reserve ratio of 15%, the bank must hold 15% of any deposit in reserves and can lend out the remaining 85%.
Therefore, from the $1 million deposit, the bank has to hold $150,000 in reserves (15% of $1 million), leaving $850,000 available to lend. This potential lending activity can lead to an increase in the money supply in the economy, as loans can be deposited and re-lent multiple times.