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Business, 23.03.2020 22:24 robert7248

If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $25.5 million worth of bonds to the public, bank reserves

A. increase by $25.5 million and the money supply eventually increases by $382.5 million.
B. decrease by $25.5 million and the money supply eventually decreases by $170 million.
C. increase by $25.5 million and the money supply eventually increases by $170 million.
D. decrease by $25.5 million and the money supply eventually decreases by $382.5 million.

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