How much will the money supply change

Reference no: EM131298757

Suppose the Fed buys $1 million in government bonds from a commercial bank. What effect will this action have on the bank's reserves and the money supply? Specifically, by how much will the money supply change? Use a required reserve ratio of 10%, and assume that banks hold no excess reserves and that all currency is deposited into the banking system.

Reference no: EM131298757

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