Problem
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.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.