Suppose the Central Bank buys $100 of bonds. a. Explain the change in money supply if people in this economy hold all assets as bank deposits. b. Explain the change in money supply if the seller of the bond holds all $100 as cash.
Suppose the Central Bank buys $100 of bonds. a. Explain the change in money supply if people in this economy hold all assets as bank deposits. b. Explain the change in money supply if the seller of the bond holds all $100 as cash.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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