Question

The balance sheet below reflects Zee Bank after its purchase of $30 million in government securities from the Fed. Assume a required reserve ratio of 10%, that banks hold no excess reserves, and all currency is deposited into the banking system. Assets Liabilites and net worth Reserves $15 million Liabilities: Checking Deposits $150 million Loans $275 million Net Worth $170 Treasuries $30 million How did the purchase of $30 million in government securities from the Fed affect the money supply

Answer 1

Answer: money supply is decreased by $300 million

Step-by-step explanation: