Assume that the federal reserve establishes a minimum reserve requirement of 12 ½ %. also assume the federal reserve conducts an open market operations purchase of u. s. treasury securities in the amount of $1,000,000. the seller of the u. s. treasury securities deposits the $1,000,000 into his account at citibank. by what dollar amount could the money supply potentially grow from these transactions? show your work.

The amount of money that the supply could potentially grow from these transactions is $8,000,000

Explanation:

Reserve requirement ratio = 12.5%

Multiplier = 1/rrr = 1/12.5% = 8

Total deposits = $1,000,000

Then, the increase in money supply = multiplier*deposits

                                                             = 8(1,000,000)

                                                             = $8,000,000

Therefore, The amount of money that the supply could potentially grow from these transactions is $8,000,000

a

b

b

a

c

b

d

d

none of these are correct, as they are all sources of american law

a

answer; no individual buyer or seller has any significant impact on the market price;