## Monetary Policy

1. Granny Bank has $792 million in deposits and$96 million in reserves. The Fed purchases $400 million in treasury securities from Ellie Mae (all of which she puts in Granny Bank) and the bank loans out all possible funds from the$400 million.

a. What is Granny Bank’s amount of loanable funds and total reserves after the Fed buys
back securities?

b. What is the total change in demand deposits and the money multiplier from the Fed’s
purchase of securities?

Can I get some sense of direction regarding this problem? I don't know how to go about this at all.