You go to a car dealership and you see a car for $15,000. You need a car loan and the dealership tells you they can get you a loan through a finance company. They tell you it will cost
$446 per month at 4.5% per year. You tell them, you can only afford up to $300 per month.
They tell you, they can get it done. Instead of a three year loan, they get you a 5 year loan at
6%. You think perfect! I can afford it, but how much more do you pay in 5 years vs. 3 years?

Explain whether each of the following events increases or decreases the money supply. a. the fed buys bonds in open-market operations. b. the fed reduces the reserve requirement. c. the fed increases the interest rate it pays on reserves. d. citibank repays a loan it had previously taken from the fed. e. after a rash of pickpocketing, people decide to hold less currency. f. fearful of bank runs, bankers decide to hold more excess reserves. g. the fomc increases its target for the federal funds rate.