Question 33 5 pts If the required-reserve ratio is 10 percent and the Fed buys $25...
Question 33 5 pts If the required-reserve ratio is 10 percent and the Fed buys $25 million worth of government bonds, the maximum potential change in the money supply will be a(n): increase of $250 million. increase of $25 million. decrease of $25 million. decrease of $250 million.
Homework Answers
Money multiplier = 1/RR = 1/0.10 = 10
The Fed buys $25 million worth of government bonds , the maximum potential change in the money supply will be an increase of (10)($25 million) = $250 million. Hence,option(A) is correct.
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Question 33 5 pts If the required-reserve ratio is 10 percent
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