Suppose an economy uses a checkable deposits only monetary system and it has a required reserve ratio of 20%. if the central bank in this economy conducts an open market purchase of $5 million treasury bills, this will potentially

This will increase the required reserve by $1 million

Explanation:

The central bank uses the purchase and sale of treasury bills to regulate money in the economy. When the central bank makes a purchase of treasury bills, then the amount of money available to banks for distribution is always increased. However, when the central bank sells treasury bills, the amount of money in the economy is reduced.

In our case, the purchase will increase the amount of money available in the economy and in turn increase the required reserve ratio.

The required reserve can be expressed as;

RR=E×T

where;

RR=required reserve

E=reserve ratio

T=treasury bills purchased

In our case;

RR=unknown

E=20%

T=$5 million

replacing;

RR=(20/100)×5=1 million

This will increase the required reserve by $1 million

idk

explanation:

bc why nah

answer; limited pay life;