A bank receives a demand deposit of $1,000 . The bank loans out $600 of this deposit and increases its excess reserves by $300 . What is the legal reserve requirement?

In the New Keynesian open economy model, if the exchange rate is fixed

A) fiscal policy and monetary policy are powerless. B) fiscal policy is an effective stabilization tool. C) a change in current total factor productivity increases output. D) monetary policy is an effective stabilization tool.

Assuming that households do not change their cash holdings and banks loan out all of their excess reserves, if the required reserve ratio (RRR) is 20 percent and the Fed purchases $2,000 worth of bonds from banks, how much money will be eventually created?

a. $1,800 b. $2,000 c. $10,000 d. $18,000 e. $20,000