Suppose the commercial banks keep no excess reserves, and people deposit all the money they receive into the banking system. Suppose the required reserve ratio is 0.2. Suppose the Federal Reserve wants to increase the monetary base by $1,000,000.
(a) How will the Fed do this?
(b) Show how this will initially affect the balance sheet of Bank of America.
(c) Show how the money expansion process will affect the balance sheets of two more commercial banks, showing the change in the overall money supply at each step.
(d) How much did money supply change as a result of the Fed's actions?

Exercise 2-12 cost behavior; high-low method [lo2-3, lo2-4] speedy parcel service operates a fleet of delivery trucks in a large metropolitan area. a careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. if a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. required: 1.& 2. using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (round the "variable cost per mile" to 3 decimal places.)