Question

Suppose the reserve ratio is 20 percent, banks do not hold any excess reserves, people hold only deposits and no currency. Then the Fed buys $10 million worth of government bonds from banks. By how much and what direction do reserves change?

Answer 1

answer: reserves will increase by $ 10 million;

the percentage of reservation will become more than 20%, which is impossible to say for sure, since there is no data on the money supply in the country.