If the required reserve ratio is 0.2, and the Fed buys $3,000 of U.S. government securities, the maximum amount by which the money supply can increase is:
a. $200

Total spending will equal total output

a. after inventory adjustments b. only when total leakages are equal to total injections c. by the end of every year d. only when the sum of saving and investment equals the sum of net taxes and government expenditures e. saving is equal to net taxes

You have $1,000 in your checking account at Generous Savings and Loan (GSL). GSL holds $300 of your money in reserve and makes a $700 student loan to Wilma, who promises to repay the loan with interest. Wilma now has an additional $700 in her checking account. By how much has the money supply M1 increased?

a. $2,000 b. $1,700 c. $1,000 d. $700