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.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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.
Transcribed Image Text: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.
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