Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 29 - Part X - The Monetary System - Problems and Applications - Page 631: 6

Answer

The smallest possible increase in the money supply happens when banks hold on to all of this money as reserves, and this would result in an increase to the money supply of 10 million dollars.

Work Step by Step

The largest possible increase in the money supply is if banks don't hold any of the money as reserves (and people don't hold on to any of this money). This would result in an increase of 100 million dollars from the 10 million dollar purchase of government bonds. $10/.1 = 100$
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