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What the immediate effect is

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There is no currency drain, all banks have the same target reserve ratio of 0.08 and initially do not hold excess reserves.

Problem 1: When the Central Bank buys $2563 worth of bonds from a commercial bank, the immediate effect is _____ and the ultimate (final) effect is _________. If necessary, round to a full number.

a. excess reserves of $2563; total deposit creation of $32038
b. excess reserves of $2358; total deposit creation of $32038
c. None of the answers offered are correct
d. excess reserves of $1886; total deposit creation of $25630
e. no excess reserves, just a change in asset composition; no change

Reference no: EM132969718

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