Suppose that at the end of Monday, the U.S. money supply was $200,000. On Tuesda

Question

Suppose that at the end of Monday, the U.S. money supply was $200,000. On Tuesday, Republic Bank engaged in only two transactions: (1) a customer withdrew $10,000 from a checking account, and (2) Republic Bank borrowed $10,000 from the Federal Reserve. Assuming that no other banks in the banking system changed the money supply, given these two transactions by Republic Bank, which of the answer choices most closely gives the U.S. money supply at the end of Tuesday? A. More information is needed; specifically, the discount rate must be known. B. $180,000 C. $200,000 D. $220,000

Explanation / Answer

Answer will be A more information is needed ; specifically , the discount rate must be nown .

this is because when republic borrow $10,000 from the fed the discount rate on which fed provide loan should be known this lead us to know the actual U.S money supply at the end of Tuesday.

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